Cenomi Retail signs pact to sell unit to Abdullah Al-Othaim Fashion for SAR 120M

Logo of Fawaz Abdulaziz Alhokair Co. (Cenomi Retail)

Fawaz Abdulaziz Alhokair Co. (Cenomi Retail) signed, on Dec. 6, a share purchase agreement to sell 100% of its subsidiary, Innovative Outfit Trading Co., to Abdullah Al-Othaim Investment Co.’s wholly-owned unit, Abdullah Al-Othaim Fashion Co., according to a statement to Tadawul. 

Innovative Outfit Trading will own the franchise rights for 18 of its brands and their related assets.    

Abdullah Al-Othaim Fashion will buy out Innovative Outfit Trading, along with the franchise rights of the brands, their 244 stores and assets for the agreed price of SAR 120 million, the statement added.    

An additional consideration for inventory on-hand will be calculated at the time of deal closing and store handover, which is anticipated in Q1 2024.  

The sale transaction falls within Cenomi Retail’s ongoing transformation program and represents a part of the strategy focusing on the key brands.   

The net sale proceeds will be used to deleverage the business through a focus on the champion brands, which operate in fashion, electronics, food and beverages categories.  

The transaction is subject to a number of conditions to be completed after signing, including, without limitation, the approval of Saudi Arabia’s General Authority for Competition, the target company’s signing of new franchise agreements, in addition to obtaining the approval of the landlords for the store handover. 

The sale relates to brands operated by Cenomi Retail across the fashion retail business, including, without limitation, household names such as Flormar, Oxxo and Monsoon. 

The asset’s book value will be determined at closing the deal and after fulfilling all conditions and factoring in inventory and any potential goodwill impact. 

The brands contributed SAR 238 million in revenue in the nine months ended Sept. 30, 2023, or 5.7% of Cenomi Retail’s total revenue. The divestment is expected to boost profitability with EBITDA rising by SAR 10 million annually. The relevant financial impact is expected to appear in Q1 2024 results. 

Any updates will be duly revealed, the statement added.