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Wed 1 Apr 2020 03:37 PM

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Coronavirus: Alshaya Group revenues plummet 95% amid store closures

Fewer than 5% of the retail giant's stores remain open, said acting CEO John Hadden

Coronavirus: Alshaya Group revenues plummet 95% amid store closures
One of Alshaya's fashion franchises is British multinational retail department stores Debenhams 

Less than 5 percent of Middle East retail giant Alshaya Group’s stores remain open due to restrictions imposed to combat the coronavirus epidemic, leading to a dramatic 95 percent drop in revenue in two months, according to acting CEO and chief operating officer John Hadden.

In a video message to the company’s approximately 60,000 employees, and seen by Arabian Business, Hadden said that “in just a few weeks, everything we know has changed.”

“In January, we served customers at over 4,500 stores, cafes and restaurants in 20 markets. Today, less than 5 percent of our stores are open,” he said. “As a result, our revenues have shrunk by 95 percent whilst our cost base has stayed the same.”

“This is not sustainable, for any business, anywhere in the world,” he added. “At some stage we truly believe things will get better, but none of us know when that will be.”

In response to the losses caused by the coronavirus pandemic, Hadden said that Alshaya has prepared a “detailed action plan” to reduce costs, which includes eliminating unnecessary expenditures, renegotiating all contracts, stopping recruitment and working with brands to reduce orders in the short-term.

“Every cost line is under the microscope,” he said. 

The action plan, Hadden added, would also involve reducing “people costs” to allow the company to bounce back after the pandemic and resultant restrictions are over.

“Our goal is to protect jobs and benefits in the long-term. But to do this, we have to take some tough measures in the short-term as we manage our way through this crisis,” he said, adding that some initial actions will be communicated to employees in the coming days.

“This will affect many of us in different ways and we have sought to be fair and balanced in our approach,” Hadden added. “Please understand, taking no action is not an option. I wish it was otherwise.”

However, Hadden said that when conditions eventually improve, he is confident Alshaya can rebuild its business as customers return to stores.

The video message ended with Hadden thanking Alshaya’s 60,000 employees – 45,000 of whom work in the Middle East – for their support over the last several weeks.

“We will do our utmost to support you, and we will continue to be transparent about the actions we are taken,” he said. “Please stay safe. Look after yourself, look after your families, and your colleagues.”

Arabian Business has reached out to Alshaya for a comment on its future plans.

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