By Soren Billing
One of Mideast's largest retailers in healthy position despite slowing market - analyst.
Stationery-to-laptop retailer Jarir Marketing remains an attractive investment despite signs of a slowing GCC retail market, Shuaa Capital has said.Jarir, one of the largest retailers in the Middle East, last week reported a 46 percent rise in fourth quarter net income, which rose to $21.1 million but failed to meet analyst expectations. Revenue was up 51 percent to $177.9 million.
“While inventory clearing through discounting has hurt fourth quarter margins, the measure is likely to have materially reduced working capital requirements, a positive for cash generation,” analyst Laurent-Patrick Gally said in a note to investors.
While some other Saudi retailers, such as car showrooms, are experiencing a significant slowdown in business, Jarir’s pace of sales remains stable.
“Sales levels remain very healthy in the first few days of 2009, over the 1,000 laptops per day average Jarir achieved in 2008,” Gally said.
Jarir’s office and school supply business, which accounts for 40 percent of its revenue, is expected to benefit from higher spending on education in the Saudi government’s 2009 budget, which calls for 16 percent year on year growth in education-related spending. Around 60 percent of the kingdom’s population is below 25 years of age.
The company has reiterated that it intends to open four new showrooms per year until 2012.
“Jarir is an attractive investment case in the GCC retail space, with a substantial Saudi twist,” Gally said.