The chief executive of Marka has resigned as the weak retail market continues to pile pressure on the loss-making company.
Marka, the first UAE-based retail company listed on the Dubai Financial Market said on Wednesday that Khaled Al Mheiri, the vice chairman, will assume responsibilities in the interim. The company gave no reason for the chief executive’s departure.
Nick Peel was appointed chief executive in August 2014 and the company listed on the DFM in September of that year. The retailer has yet to post a profit despite reiterations that it would be in the black by the end of this year. Marka’s third-quarter net loss narrowed to Dh11.8 million, while revenue fell 15.6 per cent to Dh65.9m from Dh78.1m a year ago.
The retail market in the UAE has been hard-hit by the strong US dollar, to which the dirham is pegged, making it an expensive destination for tourists from regions such as Europe, while a slower economy is also impacting the purchasing power of residents.
The retail market is also being challenged by the rise of e-commerce sites, that are eating away at the revenue of companies that have missed out on digital retail.
“Retail has been a tough market for the past 18 months,” said Matt Jay, retail analyst for CBRE.
“The strong dollar has made Dubai an expensive destination for tourists with a weaker currency. Consumer sentiment, fuelled by job insecurity and rising costs at home, has borne down on all retailers. “The sector has possibly hit a saturation point where the supply in the number of outlets has outstripped the demand from the current population. It’s a tricky time for retailers across the UAE right now,” Mr Jay said.
Marka announced in March a tie-up with Souq.com to sell its sportswear through the site, with fashion to follow in future.
Marka listed as a greenfield company with no track record, but with a promise to enable small investors to buy a slice of the UAE’s booming retail and dining industries.
The company operates three divisions – Marka Sports, Marka Hospitality and Marka Fashion. It has been on an aggressive expansion plan, opening at least 50 outlets across retail, food and beverage, and kids entertainment sectors. Its outlets including Reem Al Bawadi restaurants, Harpers Bazaar Cafe and Cheeky Monkeys are predominantly in Dubai but also in the Northern Emirates. It also has interests in Abu Dhabi’s Yas Mall with the UEFA Champions League Experience.
Mr Peel, speaking to The National in November, said he expected the company to be profitable some time next year as "we are in a challenging retail environment at the moment".
A combination of softer economic conditions affecting demand and an overcapacity of food outlets has placed a burden on food and beverage outlets.
According to the Dubai F&B consultancy Glee Hospitality Solutions, this year is forecast to be the first since 2009 in which the sector reports flat growth or up to a 5 per cent fall.
ascott@thenational.ae
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