Lulu opens 12 new stores in 9 months, reports $1.86-billion Q3 revenue after ADX listing

The retailer's Happiness Loyalty programme now has approximately five million members

Web Desk

Published: Thu 21 Nov 2024, 1:55 PM

Lulu Retail hit a $1.86-billion revenue for the third quarter of 2024, marking a 6.1 per cent growth year on year, the company announced on Thursday.

This is the retail giant's first financial update since its record initial public offering (IPO) and ADX listing on November 14.

The strong sales performance was driven by significant growth in key markets, including the UAE, Saudi Arabia and Kuwait with sales growth across key product categories, it said. Double-digit growth was seen in fresh food and mid to high single-digit improvement in electrical goods.

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Like-for-like (LFL) sales in Q3 2024 increased by 1.2 per cent to $1.7 billion, while LFL sales for nine-month period increased by 2.2 per cent to $5.3 billion.

Twelve new Lulu stores were opened within the nine-month period in 2024, with three stores rolled out in Q3. By September 30, Lulu's total selling space was 1.3 million sqm spread out across 241 stores.

The company's EBITDA in Q3 2024 was $176.3 million, up 9.9 per cent year on year. 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 per cent of total retail sales compared to 28.6 per cent in Q3 2023. Lulu’s private label products span fresh food, consumer packaged goods, lifestyle products and electrical goods.

Lulu's net profit from continuing operations increased to $35.1 million for the Q3 period, an increase of 126 per cent, driven by improved operating profit and improved cost management. For the nine-month period, net profit rose by 73.3 per cent to $151.5 million.

Growth across the region

The UAE saw strong revenue growth of 7.5 per cent in Q3 2024, mainly driven by healthy LFL growth of 4.7 per cent during the quarter and the benefit of strong market tailwinds in the region. Three new stores were opened in the nine-month period.

Revenue in Saudi Arabia grew by 5.7 per cent 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 kingdom in the nine-month 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 remains a key focus area for Lulu, with e-commerce sales increasing to $237.4 million during the nine-month period, up 83.5 per cent year on year. E-commerce sales now constitute 4.3 per cent of total retail sales.

Focused investment

Capital expenditure (for continuing operations) totalled $98.5 million during the nine-month period, constituting 1.7 per cent of total sales.

Capex was primarily invested in the opening of 12 new stores, including five in Saudi Arabia and three in the UAE, Lulu’s two largest markets. Capex as percentage of sales was 1.7 per cent for 9M 2024 as compared to 1.9 per cent 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 totalled $2.54 billion by September 30, 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.

Loyalty and expansion

Lulu’s Happiness Loyalty programme continues to gain strong traction, with the scheme now rolled out across all GCC countries, with approximately five million members by the end of the 9M 2024 period.

Post-period, the company 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 five more stores, taking the total stores opened so far in 2024 to 17.

"The vision and ambition of nations across the GCC is enabling businesses like Lulu to thrive and creating opportunities for growth," said Yusuffali MA, chairman of Lulu Retail.

"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, CEO of Lulu Retail, added: “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

"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.”

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