AFG runs Zara and other Inditex brands in Saudi Arabia. (Zara)
Shoppers are spending more at one of the region's biggest fashion franchise operators, but the interest bill on its debt keeps wiping out the gains.
AFG Retail, the Riyadh-listed company formerly known as Fawaz Abdulaziz Alhokair and the operator of Zara and other Inditex brands in Saudi Arabia, lost 233.1 million Riyal ($62 million) in the first nine months of 2026, it said in a filing on Thursday.
That's slightly narrower than the $64 million it lost a year earlier. Its third-quarter loss shrank to $26.5 million from $34.6 million, though it was wider than the second quarter's.
The good news: revenue rose 6.3% to 3.9 billion Riyal ($1 billion), up 4.5% in Saudi Arabia and 14% abroad. Electronics sales jumped 34%, sports, beauty and lifestyle 34%, and online sales 10%.
Operating profit more than tripled to $35.5 million.
The problem: net financing costs rose 34% to $84 million, more than twice what the stores earned. The jump reflects a full year of interest on loans taken in 2025.
Other drags: food and beverage sales fell 11% as it closed restaurants, and it booked $15.8 million in impairments.
The balance sheet: shareholders' equity is now negative 1.83 billion Riyal ($488 million), deeper than a year ago. In other words, accumulated losses have wiped out its capital several times over.
The bigger picture: Saudi retail is growing, but margins are thin and shoppers are careful. Savola's Panda supermarkets also swung to a third-quarter loss this week.
What to watch: any plan to cut debt or raise capital, as the market regulator presses companies with deep losses for recovery plans.
