Photo: SACO
The new management at one of Saudi Arabia's oldest home-improvement retailers has opened its tenure with a loss, leaving investors to judge whether this is a clean-up or a deeper slide.
Saudi Company for Hardware, the chain known as SACO, swung to a third-quarter net loss of 15.7 million Riyal ($4.2 million), the company said in a filing on Saturday. A year earlier, one-off gains helped it make a profit of $10.5 million.
Revenue fell 18% to $57 million. The company blamed weaker sales and additional provisions.
SACO didn't respond to a request for comment.
The first test
July to September was the first full quarter for SACO's new leadership.
Shareholders elected a new board in June. It named Wael Jamjoom as chairman and board member Sakhr Jamjoom, a former managing director of food maker Halwani Bros, as managing director.
The board also declined to renew the contract of Chief Executive Abdel-Salam Bdeir, who left on Oct. 31. No successor has been named.
The extra provisions are the key question. New management often books charges in its first results to reset expectations, and SACO hasn't said whether more will follow.
A turnaround that didn't stick
Bdeir took over in 2023 with a transformation plan after losses of $38 million in 2022 and $18 million in 2023.
SACO returned to profit last year, but most of that came from one-off items, and its underlying earnings were about $5 million. This year it has slipped back. It barely broke even in the first half and is now about $4 million in the red after nine months.
Loose ends
SACO exited its stake in US retailer cooperative Ace Hardware in January and closed a franchise store in Tabuk.
It is also fighting an $11 million arbitration claim from Astra Food over a franchise licensing dispute. That's more than twice its underlying profit last year.
The bigger picture
Saudi retail is splitting between chains that sell what shoppers won't skip and those that rely on purchases people can delay. Electronics and books chain Jarir raised its quarterly payout on Sunday after a 17% rise in nine-month profit.
What investors are doing
SACO's shares have fallen about a third this year. Investment banks EFG-Hermes and Arqaam Capital both cut the stock to Sell over the summer.
The founding shareholders, including Abdulrahman Sharbatly, Abrar International and the Al Hamidi family, still own about 55% of the company. The new chairman holds less than 0.5%.
