Al Hokair fashions strong results

Company announces strong numbers for the second quarter

The Saudi fashion retailer Fawaz Abdulaziz Al Hokair is looking like a brand any investor would want in his portfolio. On Monday the company announced strong numbers for the second quarter, beating most analyst estimates. Net income was up 53 per cent for the second quarter compared with the same period last year to 52m Saudi riyals, against NCB Capital's estimate of 42m riyals.

Shares of Al Hokair increased 1.2 per cent to 42 riyals yesterday. The NCB Capital analyst Farouk Miah maintains a neutral rating on the stock with a fair-value price of 46.5 riyals. Al Hokair was launched in 1990 with two menswear stores in Riyadh and today owns the rights to a range of international brands such as Zara, which accounts for about 23 per cent of the company's revenues. It also owns the rights to Promod, Banana Republic and Monsoon.

Al Hokair, which boasts a market capitalisation of 2.9bn riyals on the Saudi Tadawul exchange, was spun off from its parent company, the Al Hokair Group, which owns a network of malls in the kingdom among other holdings. Al Hokair this year bought 125 fashion stores from its parent company, including 55 in Dubai. It is also looking to expand into former Soviet countries, including Kazakhstan, Uzbekistan and Georgia.

The retailer's expansion is boosting Al Hokair's profits. At the end of the first quarter this year, Al Hokair had 895 stores, compared with 451 stores five years earlier. The company says it hopes to have 1,500 stores by the end of 2015. Al Hokair is also moving into non-fashion retail with a deal to open 14 FIFA-themed stores, which will be selling goods such as footballs, key rings and water bottles.

Mr Miah said lower costs due to a restructuring two years ago are starting to pay off. The decline in the value of the euro against the dollar has also helped with the purchase of some of the company's European brands, which account for 46 per cent of its product line.