Majid Al Futtaim retail revenue drop drags H1 profit

• Majid Al Futtaim H1 profit down 6%
• 467 Carrefour stores in 14 countries
• New leadership in place

Increasingly frugal shoppers and currency devaluations led the retail division of UAE conglomerate Majid Al Futtaim to report an 11 percent year-on-year drop in revenue in the first half of the year, resulting in its net profit dropping 6 percent.

The company’s retail operations account for around 70 percent of its total business and consist of 467 Carrefour stores in 14 countries across the Middle East, North Africa and CIS regions.

Revenues dropped to AED11.6 billion ($3 billion), while EBITDA declined by 47 percent year on year to AED278 million.

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“This is attributable to declining basket size resulting from dampened consumer sentiment following geopolitical conflict in the region and the impact of currency devaluation in Egypt and Kenya,” a statement from the company said.

Majid Al Futtaim Retail has 79 Carrefour stores in Egypt, a mix of hypermarkets and supermarkets, with a further 14 in the pipeline to be opened this year. In Kenya there are 23 stores, with seven more to be added.

Despite strong results across its properties, lifestyle and entertainment portfolios, Majid Al Futtaim reported an overall 6 percent decline in year-on-year revenues at AED16.7 billion and a 6 percent drop in net profit to AED1.6 billion.

The drag from retail continues from last year, when the company experienced a 4 percent decline to AED24.7 billion in that arm of the business.

“A particular headwind is the rise of impulse-driven convenience shopping where the competition is much larger for Carrefour compared to the planned shopping, which is hypermarket-driven where Carrefour has lower competition,” said Sandeep Ganediwalla, partner MEA at Redseer Consulting.

He added that, as a French brand, Carrefour may also be subject to boycotts of western brands over the ongoing conflict in Gaza.

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Earlier this month, UAE-based supermarket operator Spinneys announced profits of AED146 million for the first half of 2024, up 18 percent year on year.

Union Coop, meanwhile, revealed a 21 percent increase in profits for the six-month period to AED163 million compared with H1 2023.

Majid Al Futtaim declined to comment further on the figures, but Ahmed Galal Ismail, CEO of Majid Al Futtaim Holding, said: “The appointment of new leadership in the second quarter is set to further strengthen retail's performance through a turnaround plan focusing on market leadership through unrelenting customer-centricity.”

Majid Al Futtaim Retail’s discount brand in Egypt, Supeco, opened four new stores in the first half of the year, and a further 11 are planned for the remainder of 2024.

The digital side of Majid Al Futtaim’s retail business reported 16 percent growth in revenue to AED1.3 billion, which was up 109 percent year on year and turned positive for the first time.

“The ongoing transformation of our retail digital business has enabled solid progress in advancing our omnichannel aspirations,” said Ismail.