Al-Hokair: Comprehensive Analysis of Financial Performance in Saudi Retail

Fawaz Abdulaziz Al-Hokair & Brothers was established in the 1970s as a small family business focused on trading fabrics and clothing. Over time, the company gradually expanded to become a major group in the retail sector within Saudi Arabia and beyond. Its entry into the franchise business for global brands marked a significant turning point, as it acquired franchise rights for leading names such as Zara and Stradivarius. This move enhanced the company's presence and attracted a broad customer base. Al-Hokair's expansion was not limited to fashion; it also made significant inroads into the hospitality and restaurant sectors, owning and managing local and international restaurant chains, as well as investments in hotels and resorts. With the launch of the "Cenomi Retail" brand, Al-Hokair has become a key player in the multi-sector retail space. The company's evolution has not only involved geographical expansion but also adaptation to technological and economic changes, highlighting its resilience and ability to continue growing in a changing competitive environment.

Al-Hokair relies on a diversified business structure that includes two main sectors: fashion retail and hospitality/restaurants. In the retail sector, Al-Hokair manages store networks under global and local brands, covering all age groups from children to adults. The "Cenomi Retail" brand is the company's most prominent face in the Saudi stock market. The hospitality sector includes the operation and development of upscale restaurant and café chains, in addition to investments in hotels and resorts, providing the company with an additional income source and protection against retail sector fluctuations. Al-Hokair benefits from exclusive franchise rights for brands, providing it with continuous returns and enhancing its competitive position. The company's structure is geographically diverse, with branches in Saudi Arabia, the Gulf countries, and North Africa, allowing it to capitalize on market variations and reduce risks associated with a single market.

In 2024 and 2025, Al-Hokair witnessed a notable improvement in its financial performance, with revenues and net profits rising after a period of challenges and accumulated losses. The stock price in mid-2025 was approximately 55 Saudi Riyals, with a market value nearing 2.1 billion Riyals. The price-to-earnings (P/E) ratio improved to 10-12 times, reflecting the recovery of the company's profits. In the fourth quarter of 2024, Al-Hokair reported revenues of 1,850 million Riyals, with an annual growth of 8%, and a net profit of 80 million Riyals, an increase of 15% compared to the same period last year. This reflects the company's success in implementing plans to improve operational efficiency and streamline costs, particularly in inventory management and renegotiating lease contracts. The continued revenue momentum indicates stable demand for the company's products and an expanding customer base. The dividend yield remains limited at 1-2% of the stock price, as the company prefers to reinvest profits in expansion and growth operations.

In recent years, Al-Hokair has followed a conservative dividend policy, not announcing fixed cash distributions, preferring to use profits to support expansion plans and meet financial obligations. This approach aligns with the company's strategy to return to profitability after overcoming a phase of accumulated losses, focusing on improving liquidity and strengthening its financial position. Estimates suggest that if financial stability and profits continue, the company may start distributing cash dividends at a rate of 1-2% of the stock price in the coming years. It is worth noting that this level of distribution is considered low compared to many companies in the sector, linked to Al-Hokair's need to finance local and international expansion plans. This approach provides the company with greater flexibility to face market fluctuations and reflects its commitment to achieving sustainable growth in the long term. As financial results improve, the decision on dividends remains subject to board approval and market conditions and future cash flow expectations.

Al-Hokair's activities belong to the consumer retail sector, one of the most dynamic sectors in the Saudi economy. The sector is characterized by product diversity and a multitude of local and global players, with a strong focus on fashion, hospitality, and entertainment. The sector has seen robust growth in recent years, supported by Saudi Vision 2030, which aims to enhance local spending and localize global brands. However, the sector faced significant challenges during the COVID-19 pandemic, prompting companies to restructure costs and invest heavily in digital channels and e-commerce. Al-Hokair benefited from these trends by developing e-commerce platforms and expanding its branch network. With the return of economic and tourism activities in the Kingdom during 2023-2024, the sector has shown a clear recovery in sales and revenues, and Al-Hokair has seen significant improvement in its financial results. Future forecasts indicate continued sector growth with rising individual income and the expansion of shopping centers, while competition remains fierce with the entry of new companies and consumer experiences into the market.

Al-Hokair faces strong competition in the Saudi retail market from several major companies and e-commerce stores. Among the main competitors are Jarir Marketing Company (4901), which focuses on electronics and books but competes for general spending, and Extra (4640), specializing in consumer electronics. In the fashion sector specifically, Al-Hokair faces local and global competitors with well-known brands. It is also challenged by e-retailers such as Souq.com and Noon, which have gained increasing market share during the pandemic. The entry of hospitality and entertainment companies like Saudi Hospitality and Entertainment presents an additional challenge, as they compete to attract consumers for spending on entertainment and dining. Nevertheless, Al-Hokair benefits from its exclusive franchises for global brands and a wide branch network, giving it a strong competitive advantage. The ability to innovate and enhance the customer experience remains crucial in maintaining market share amid a changing competitive environment.

In recent years, Al-Hokair has undergone a significant transformation towards e-commerce and digitalization, responding to changing consumer habits and the growing importance of online shopping. The company has developed e-commerce platforms for its brands, focusing on enhancing user experience through fast delivery services and digital promotions. Investment in digital channels has boosted the company's sales during health lockdowns and allowed it to reach a broader customer segment. Al-Hokair has also analyzed customer data to personalize offers and improve inventory management. The company continues to develop electronic payment technologies and expand its digital presence, enhancing its ability to compete with local and global e-commerce stores. Digital transformation is a fundamental part of Al-Hokair's future strategy, as the board plans to continue investing in digital infrastructure and integrating operations between e-stores and traditional branches.

In the fourth quarter of 2024, Al-Hokair announced encouraging financial results, with revenues reaching 1,850 million Riyals, an annual growth of 8%, while net profit stood at 80 million Riyals, a 15% increase compared to the same quarter in 2023. The third quarter of 2024 saw similar revenue figures and a net profit of 70 million Riyals, indicating the continuity of positive momentum in financial performance. This improvement is attributed to increased sales from international branches, enhanced profit margins in the hospitality sector, and efficient cost management and inventory control. Throughout 2024, net profit grew by over 30% in most periods compared to 2023, reflecting the success of the company's financial recovery plans. The expansion of new brands and the opening of innovative restaurants and cafes have also supported growth. These results confirm Al-Hokair's ability to adapt to changes and benefit from the recovery in the retail sector.

Despite the notable improvement in Al-Hokair's performance, the company faces several potential risks and challenges. Among the most significant are fluctuations in consumer demand linked to economic conditions and oil prices, which directly affect spending on non-essential goods such as fashion and entertainment. The company also faces intense competition from e-commerce stores and new brands, as well as fluctuations in currency exchange rates, particularly in international markets. Rapid changes in consumer tastes require Al-Hokair to be flexible in inventory management and continuously update its brands. Financially, financing expansion poses a burden on the company in case of weak cash flows. The need to continue improving operational efficiency and controlling costs remains a top priority for management to address these challenges and ensure sustainable growth.

Al-Hokair's future vision focuses on both horizontal and vertical expansion, aiming to increase the number of branches in Saudi cities and enter new international markets such as Cyprus and the United Kingdom. The company seeks to enhance its position in malls and shopping centers, in addition to expanding its share in the hospitality and restaurant sector by opening new restaurants under global and local brands. Al-Hokair also places great importance on developing e-commerce and investing in digital infrastructure, enhancing its ability to keep pace with technological transformations and benefit from the growth of online shopping. The company is also working to improve customer experience and offer innovative products and services that meet consumer expectations. These plans are strengthened by government initiatives to support the private sector and increase its contribution to GDP, within the objectives of Vision 2030, which focuses on diversifying national income sources and enhancing non-oil sectors.

Al-Hokair is committed to sound governance standards and regular disclosure of its financial results and regulatory news through the Saudi Capital Market Authority website and the Tadawul platform. In 2024 and 2025, the company announced changes in its board of directors, with new members appointed to renew the leadership structure and guide growth strategies. Al-Hokair also disclosed that it has surpassed the phase of accumulated losses exceeding 50% of its capital, leading to the stabilization of the company's legal status and the removal of regulatory restrictions. These steps underscore the company's commitment to complying with regulatory requirements and enhancing transparency for investors. Timely disclosure of plans and financial results is one of the factors that boosts investor confidence and supports the stability of the stock price in the market.

Al-Hokair is directly affected by macroeconomic developments in the Kingdom, especially with changes in individual income, consumer spending levels, and government trends to enhance non-oil sectors. The Saudi government has launched several initiatives to support the retail sector and localize global brands, as well as stimulate domestic and foreign tourism through events such as Riyadh Season and Jeddah Season, positively impacting the company's revenues. On the other hand, Vision 2030 imposes obligations on companies to adopt best practices in governance and sustainability and provide job opportunities for Saudis. Al-Hokair is keen to align its strategies with these trends by investing in training, localizing jobs, and developing local products. The company's ability to adapt to economic changes and consumer expectations remains a key factor in enhancing its sustainability and growth in the coming phase.

In 2024, several notable developments occurred in Al-Hokair's journey, as the company announced the addition of franchises for five new brands in the fashion and sports sectors. It also launched plans to open 30 new restaurants in major cities such as Riyadh, Jeddah, and Mecca by 2025, focusing on global and local cuisines. The company confirmed in official statements that it has surpassed the phase of accumulated losses and is prepared to return to dividend distribution upon stabilizing financial results. Additionally, Al-Hokair saw a board restructuring to renew leadership and drive expansion plans. The results of the third and seventh quarters of 2025 exceeded expectations in sales growth, particularly in the restaurant sector and private label products. These developments reflect the company's commitment to sustainable expansion and strengthening its position in the local and regional market.

Al-Hokair plays an important role in supporting the national economy by providing thousands of direct and indirect job opportunities in the retail and hospitality sectors. The company is committed to localizing jobs and developing the skills of Saudi personnel, and it participates in social responsibility initiatives by supporting charitable activities and local community programs. Al-Hokair seeks to enhance environmental and social sustainability by applying quality standards in products and reducing waste in supply chains. It also works to improve the work environment and provide training and development opportunities for employees. This aligns with the objectives of Vision 2030, which aims to enhance the role of private companies in the economic and social development of the Kingdom.