Marka’s retail acquisition spree drives up third-quarter losses

Retailer’s shares rise as firm expects profits next year.

Children play in a Dubai outlet of Cheeky Monkeys, which Marka acquired a majority stake in this year. Ravindranath K / The National

Losses at Marka, the recently floated Dubai-based retailer, grew in the third quarter as the company recognised Dh7.36 million of acquisition costs from its retail buying spree.

Marka, which listed on the Dubai Financial Market last September, posted a net loss of Dh14.7m for the three months to the end of September, ­compared with a loss of Dh2.14m in the second quarter and Dh8.37m in the first ­quarter.

The company said the results reflected “the effect of the significant acquisition activity” it undertook this year, but reiterated that it expected to become profitable next year.

Marka posted a gross profit of Dh47.1m in the third quarter and revenue of Dh84m.

Marka shares closed up 8.3 per cent to Dh1.30 in Dubai yesterday. Their IPO price was Dh1 a share. This year the company bought Retailcorp (a unit of Istithmar World), a majority stake in Cheeky Monkeys, a children’s entertainment group, the restaurant chain Reem Al Bawadi, and the sports memorabilia company Icons.

During the third quarter, Marka also acquired the Middle East franchise rights for the ice-cream brand Morelli’s Gelato, dish van, a French jewellery brand, Carven, a French fashion brand, and City Chic, a fashion brand for plus-size women. Marka also confirmed plans to open the first Carven and dish van boutiques in phase two of City Walk in Dubai, and three City Chic outlets before the year end.

“During the last quarter, we were able to fully recognise the contributions from four of our five acquisitions, enabling us to achieve operational profitability on an adjusted EBITDA [earnings before interest, taxes, depreciation and amortisation] basis during the slowest period in UAE retail calendar – summer and Ramadan,” said Khaled Almheiri, Marka’s vice chairman and managing ­director.

“We have made rapid progress on our strategy to ­develop a balanced, diversified retail portfolio that will ­generate value for our shareholders.

“We are taking proactive measures to manage our cost base and are working actively to add value and drive growth across our three divisions – sports, fashion and ­hospitality.”

Marka currently manages 39 stores and plans to increase that to 64 outlets next year, comprising more than 360,000 square feet of retail space.

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