Afg International Company · TADAWUL:4240
Afg International — Cenomi Retail — FY2023 Earnings Presentation
36 slides from Afg International's earnings presentation, 2024
Slide 1: Cenomi Retail Earnings Presentation
Cenomi Retail Earnings Presentation For the year ended 31 December 2023 (“FY + Q4 23”)
Slide 2: Disclaimer
Disclaimer This presentation has been prepared solely for use as an investor presentation for Cenomi Retail. (the “Company”). By attending or by reading this presentation, you agree to be bound by the following limitations. The information contained in this presentation is for background purposes on
Slide 3: Table of Contents
Table of Contents 08 13 16 29 03 FY 23 Earnings Presentation
Slide 4: Cenomi Retail at a glance
Cenomi Retail at a glance SAR 5.2 BN SAR (105.5) MN SAR 1.1 BN Revenues EBITDA Net loss SAR 1.0 BN (Q4) SAR (452.2) MN (Q4) SAR 1.0 BN (Q4) 5.3% YOY FY 2023 119.1% YOY FY 2023 3,118.6% YOY FY 2023 SAR 1.1 BN SAR 319.1 MN 14 Weeks International Revenue Online Sales Inventory Turnover SAR 291.8 MN (Q4
Slide 5: The Saudi market represents a secular growth opportunity
The Saudi market represents a secular growth opportunity 01 Youthful demographics with 63% of population under 30 02 A booming consumer outlook 500 - 900 KSA population: 3% 2 – 3x +4 million (+12%) 250 - 300 25% Tourism: 100 MN annual visits 73% 2019 2030 KSA Discretionary consumer spend Potential E
Slide 6: KSA consumer spending trends finish the year on a strong note
KSA consumer spending trends finish the year on a strong note POS Transactions* - KSA Market POS Transactions* - Select Sectors (SAR Million) (SAR Million) +10% vs +11% +13% +7% -8% +8% FY22 +0.1% Q4'22 613,957 157,703 Q4'23 145,040 +8% 559,135 473,258 20,981 23,371 22,071 25,006 10,130 10,139 +32%
Slide 7: Saudi Arabia presents an unparalleled opportunity
Saudi Arabia presents an unparalleled opportunity The birth of The New Saudi consumer presents unique growth prospects Shifting consumer behaviour KSA Retail Spend Overview (2022-2027, in SAR MN) Market Size Market Size CAGR Category 2022 2027 2022-2027 Groceries 179,216 226,429 4.8% F&B 99,769 137,
Slide 8: Strategic Review
01 Cenomi Retail Strategic Review FY 23 Earnings Presentation Q1 23 Earnings Presentation 8 08
Slide 9: Transforming portfolio, expanding brand champions and enhancing operational efficiency
Transforming portfolio, expanding brand champions and enhancing operational efficiency ▪ Exited the Balkans, exiting Morocco and the US and rationalized Egypt Geography ‘Saudi First’ Strategy operations ▪ Double down on Saudi market and wider MENA region Evolve from apparel ▪ Defend & maintain Fashi
Slide 10: Navigating towards enhanced potential and profitability
Navigating towards enhanced potential and profitability Focus Phase 1: Phase 2: Phase 3: Fix The House (2023-2024) Embark on Growth (2024-2026) Achieving Optimal Potential (2026+) Turnaround Growth Scale existing brands to maximum potential Rationalize brand and store portfolio Invest to scale exist
Slide 11: Solid progress made across all fronts towards turnaround strategy
Solid progress made across all fronts towards turnaround strategy Market Brand Store Operational Governance Rationalization Rationalization Rationalization Enhancement • Successfully exited the • Finalized the disposal of • Closure of 303 stores in • Average revenues per • 40+ Operational Balkans th
Slide 12: Rolled out a full-fledged program to deliver best in class governance and controls
Rolled out a full-fledged program to deliver best in class governance and controls Topic Achieved so far Currently progressing in • Developed new simplified plug & play model to establish consistent • Operationalize the design by introducing the new organizational Cenomi Retail Way of Operating mode
Slide 13: Operational Overview
02 Operational Overview FY 23 Earnings Presentation 13
Slide 14: Continued efforts towards optimizing market, brand & store footprint
Continued efforts towards optimizing market, brand & store footprint Retail Market Rationalization ▪ 20 stores opened Q4’23 Retail ▪ 18 stores closed ▪ 2 net openings Successfully exited the Balkans with closure of 8 stores ▪ 13 stores opened Q3’23 Retail ▪ 56 stores closed Rationalized operations i
Slide 15: Tangible progress in store optimization evident in network evolution
Tangible progress in store optimization evident in network evolution Store network Saudi retail store F&B store evolution network evolution network evolution 257 1,002 1,560 1,465 908 1,389 1,340 1,345 1,345 835 823 824 824 254 254 254 250 254 257 251 254 254 251 115 250 113 1,002 37 908 835 823 824
Slide 16: Financial Overview
03 Financial Overview FY 23 Earnings Presentation Q1 23 Earnings Presentation 16 16
Slide 17: Financial performance overview
Financial performance overview Financial highlights Total revenues decreased 5.3% to SAR 5.2 BN • KSA retail revenue dropped 6.8%, after closing 178 stores in KSA. • F&B revenue declined 21.2% to SAR 379.2 MN. • Offset by a 23.7% surge in online sales and a 7.7% increase in international retail reve
Slide 18: Reported revenues impacted by retail portfolio transformation
Reported revenues impacted by retail portfolio transformation. However, revenue per store grew 9.8% Revenue, SAR million LFL consolidated sales growth, % ▪ Revenue were impacted by the business transformation and a volatile ▪ Weak LFL in FY 2023 mostly driven by tail brands while Champion retail mar
Slide 19: Champion Brands show sustained international growth momentum amidst weakening LFL
Champion Brands show sustained international growth momentum amidst weakening LFL LFL Saudi retail sales growth % LFL International Retail growth % ▪ Saudi retail, like-for-like growth slightly weakened over the year, ▪ International LFL growth maintained positive momentum during the primarily influ
Slide 20: Leading brands sustain as tail brands weaken fashion performance
Leading brands sustain as tail brands weaken fashion performance Fashion & Apparel Revenues (SAR Million) +3% LFL -0.3% LFL -13% LFL FY'22 FY'23 2,268 1,973 1,376 1,423 1,275 1,272 Zara Inditex Fashion FY 23 Earnings Presentation 20 20
Slide 21: Online channel is picking up with a 24% growth in FY'23
Online channel is picking up with a 24% growth in FY'23. Online revenues, SAR MN E-commerce, % of total retail sales 319 7.6% +23.7% 258 6.2% 6.1% 5.6% 5.4% 4.7% 88 91 77 64 Q1'23 Q2'23 Q3'23 Q4'23 FY22 FY23 Q1'23 Q2'23 Q3'23 Q4'23 FY'22 FY'23 FY 23 Earnings Presentation Q1 23 Earnings Presentation
Slide 22: Underlying sales efficiency increased YoY due to portfolio transformation
Underlying sales efficiency increased YoY due to portfolio transformation in 2023** Sales per SQM (exc. Online) Sales per Store (KSA) 11,735 11,914 11,303 4,521 11,494 11,244 1,465 1,194 960 11,014 763 3,989 448 433 432 435 478 437 908 835 823 824 1,002 824 Q1'23 Q2'23 Q3'23 Q4'23 FY'22 FY'23 Q1'23
Slide 23: Online and international experience growth as a part of revenue mix
Online and international experience growth as a part of revenue mix Revenue by division Revenue by channel Revenue by geography 1% 7% 6% 4% 9% 17% 3% 14% 5% 22% 2% 19% 72% 71% 81% 95% 78% 94% KSA Retail Int'l Retail F&B Stores Online KSA CIS Egypt Others FY-23 - Outer circle FY-22 - Inner circle FY
Slide 24: Impact of business transformation reflected in gross profit and EBITDA decline
Impact of business transformation reflected in gross profit and EBITDA decline in FY’23 Gross Profit, SAR MN – GPM, % EBITDA, SAR MN – EBITDA Margin, % ▪ A decrease in gross profit, which fell by 23.5% y-o-y from SAR 845.3 ▪ EBITDA loss was driven by non-recurring charges brought upon by the million
Slide 25: Updated inventory management systems improved inventory turnover
Updated inventory management systems and processes improved inventory turnover Inventory balance (SAR MN) Inventory efficiency ratios ▪ Inventory continues to shrink as a part of optimization efforts to ▪ Inventory on hand improved to 14 weeks thanks to improved purchasing enhance liquidity and effi
Slide 26: Net profit FY'23 impacted by one-offs, international exits and seasonality trends
Net profit FY’23 impacted by one-offs, international exits and seasonality trends FY 23 Earnings Presentation 26 26
Slide 27: Strategic approaches to address accumulated losses (1/2)
Strategic approaches to address accumulated losses (1/2) Capital restructuring program approved per the following Options to reduce Acc. Losses / Share Capital Ratio Impact Operational Performance / Turnaround: In line with the 2024 target - minimize 01 losses and embark on profitable growth Accumul
Slide 28: Strategic approaches to address accumulated losses (2/2)
Strategic approaches to address accumulated losses (2/2) An amended agreement has been signed with Abdullah Al Othaim ■ Five brands will be transferred through two newly-formed SPVs which will be Fashion Company to sell 5 brands sold to Al Othaim (Aldo, Aldo Accessories, Charles & Keith, Pedro, and
Slide 29: Appendix
05 Appendix FY 23 Earnings Presentation Q1 23 Earnings Presentation 29 29
Slide 30: Income statement
Income statement SAR Million Q4 2022 Q4 2023 % Change FY'22 FY'23 % Change Revenue 1,060.1 1,011.4 -4.6% 5,525.3 5,232.2 -5.3% Cost of revenue -818.5 -921.9 12.6% -4,680.1 -4,585.7 -2.0% Gross profit/(loss) 241.6 89.6 -62.9% 845.3 646.5 -23.5% Gross Profit Margin 22.8% 8.9% (13.9pp) 15.3% 12.4% (2.9
Slide 31: Balance sheet
Balance sheet SAR Million Dec ‘23 Dec ’22 SAR Million Dec ‘23 Dec ‘22 Assets Equity & Liabilities Share Capital 1,147.7 1,147.7 Property, Plant and Equipment 1,150.0 1,324.3 Reserves ( Statutory, Foreign Currency and Fair Value) -564.5 -524.1 Right-of-Use Assets 2,044.7 2,347.1 Fair value reserve 42
Slide 32: Market context
Market context Historical vs. Future Projected Retail Spend (CAGR)14,2% 1 16,8% 9,2% 6,5% 6,4% 7,3% 8,2% 6,8% 16.8 7,1% 6,3% 4,9% 5,1% 4,6% 5,1% 5,4% 4,6% 14.2 The Saudi Retail sector has faced 1,7% 2,8% 3,9% 9.2 key headwinds but is poised for 7.1 6.5 6.4 7.3 6.3 8.2 6.8 4.9 5.1 4.6 5.1 5.4 4.6 rob
Slide 33: Consumer Trends
Consumer Trends: Consumer trends Moving forward, Cenomi Retail will need to cater to new consumer trends with significant implications for the future of the industry. Increasing digital / Scale digital e-commerce channels & adoption reinvent role of stores Shift towards Re-mix portfolio to experienc
Slide 34: Cenomi Retail brand portfolio
Cenomi Retail brand portfolio Sports F&B Fashion Multimedia Lifestyle Indite & Zara Beauty FY 23 Earnings Presentation Q1 23 Earnings Presentation 34 34
Slide 35: Moving towards best-in-class governance to foster greater transparency and management control
Moving towards best-in-class governance to foster greater transparency and management control • Closer collaboration with Audit Committee • In 2023, related parties settled SAR 437 and the Board of Directors to revamp Related million of dues to Cenomi Retail Audit Party policies and processes to sup
Slide 36: THANK YOU
Cenomi Retail THANK YOU Contacts Investor Relations Department Email: IR.retail@cenomi.com For more information, visit Tel: +966 (11) 825 2080 https://ir.cenomiretail.com/