Lulu Retail, the largest and fastest growing pan GCC full line retailer, has seen its net profit from continuing operations soar 126% to $35.1 million driven by improved operating profit and better cost management. For the nine-month (9M) period, net profit from continuing operations improved by 73.3% to $151.5 million.
Lulu Retail delivered robust revenue growth in Q3 2024 reaching $1.86 billion, up 6.1% YoY. The strong sales performance was driven by significant growth in key markets, including UAE, Saudi Arabia and Kuwait with sales growth across key product categories, including double-digit growth in Fresh Food and mid to high single-digit improvement in Electrical Goods.
Like-for-like (LFL) sales in Q3 2024 increased by 1.2% to $1.7 billion, while LFL sales for 9M 2024 increased by 2.2% to $5.3 billion.
Strong revenue growth
The UAE saw strong revenue growth of 7.5% in Q3 2024, mainly driven by healthy LFL growth of 4.7% during the quarter and the benefit of strong market tailwinds in the region. Three new stores were opened in the 9M 2024 period.
Revenue in KSA grew by 5.7% to $369.3 million in Q3 2024, driven by an improvement in Lulu’s fresh food offer, as it tailored its product mix to cater to the growing demand for fresh products in the Kingdom. Five new stores were opened in KSA in the 9M 2024 period, including two Hypermarkets, two Express stores and one Mini Market.
Oman, Kuwait and Bahrain all achieved robust revenue growth, with Qatar delivering stable revenue and maintaining its leading market share position.
Omnichannel focus
Omnichannel remains a key focus area for Lulu, with e-commerce sales increasing to $237.4 million during the nine-month period, up 83.5% YoY. E-commerce sales now constitute 4.3% as a percentage of total retail sales.
EBITDA in the Q3 2024 was $176.3 million, up 9.9% YoY, with an EBITDA margin of 9.5%, a c.30bps improvement YoY. The strong EBITDA performance was driven by Gross Margin expansion of c.130bps in Q3 2024, enabled by an improvement in Lulu Retail’s product mix and an increase in sales across higher margin categories, including Private Label products, which now represent 29.3% of total retail sales compared to 28.6% in Q3 2023. Lulu’s Private Label products span fresh food, consumer packaged goods, lifestyle products and electrical goods.
Focused investment in expansion continues
Capital expenditure (for continuing operations) totaled $98.5 million during the 9M 2024 period, constituting 1.7% of total sales. Capex was primarily invested in the opening of 12 new stores, including five in KSA and three in the UAE, Lulu’s two largest markets.
Capex as percentage of sales was 1.7% for 9M 2024 as compared to 1.9% for 9M 2023. This was on account of lower store openings and a gradual shift towards asset light model that requires less capex.
Net debt as on September 30, 2024 totalled $2.54 billion, representing Net Debt/EBITDA of 3.2x on an IFRS-16 basis. Net Debt/EBITDA excluding leases remained stable at 1.4x, with the company in a strong position to continue investing in growth.
Store and loyalty expansion
Lulu Retail introduced a total of 12 new stores in the 9M 2024 period, with three new stores rolled out in the Q3 2024 period, comprising three express stores, adding a total of 8,033 sq m during the quarter. Total selling space as on September 30, 2024 was 1.3 million sq m.
Lulu’s Happiness Loyalty programme continues to gain strong traction, with the program now rolled out across all GCC countries, with a total of approximately 5.0 million members at the end of the 9M 2024 period.
Post-period, Lulu announced a strategic partnership with Abu Dhabi’s Modon Holding to build retail facilities, including hypermarkets, supermarkets and other retail stores. In addition, Lulu also opened a further five stores taking total stores opened so far in 2024 to 17 stores.
Outlook maintained
Lulu Retail’s growth strategy is focused on four key pillars: Enhancing its existing store network, expanding its store network, driving operational efficiencies and delivering revenue upside through private label and loyalty program expansion. Lulu remains on track to deliver on its 2024 guidance, as communicated at the time of its IPO.
Yusuffali MA, Chairman of Lulu Retail, commented: “It has been a milestone period for our team, with our record listing on ADX and our first set of results as a listed company. The vision and ambition of nations across the GCC is enabling businesses like Lulu to thrive and creating opportunities for growth.
“The flexibility of our three-store format and growing e-commerce presence allows us to grow in diverse communities and to form strong partnerships across the region, as seen with the 12 stores we opened in the first nine months of this year and our recent partnership with Modon Holding. We’re excited to continue our growth journey as a listed company, delivering on the targets we’ve communicated to investors and ensuring Lulu remains where the world comes to shop.”
Saifee Rupawala, Chief Executive Officer of Lulu Retail, commented: “The third quarter and nine-month period were marked with ongoing revenue and profit growth across our business, driven by sales growth across our six GCC markets, strategic expansion in higher margin segments like Private Label and through investment in operational efficiencies and customer-focused engagement. Our Happiness Loyalty Programme continued its strong momentum with 5.0 million members by the end of Q3 – a remarkable achievement given it was only launched in January 2023. The programme provides valuable data insights for our teams that are driving sales and repeat purchase across the Group. We are encouraged by the growth we have seen in the business and are pleased to reiterate our guidance for the 2024 period, with the fourth quarter seasonally stronger, supported by promotional campaigns and higher footfall given the holiday period.”--TradeArabia News Service
