Abu Dhabi-based retailer Lulu Retail Holdings PLC (Lulu Retail) has released its financial results for the three-month and nine-month periods ending on September 30, 2024 (“Q3 2024” and “9M 2024”), marking its first update since the record IPO on the Abu Dhabi Exchange (ADX) on November 14, 2024.
In Q3 2024, Lulu Retail demonstrated impressive revenue growth, reaching $1.86 billion, which represents a 6.1 percent increase year-over-year. This robust sales performance was fueled by significant growth in key markets such as the UAE, the Kingdom of Saudi Arabia, and Kuwait, with notable double-digit growth in Fresh Food and mid to high single-digit improvements in Electrical Goods.
Like-for-Like sales performance
Like-for-like (LFL) sales for Q3 2024 rose by 1.2 percent to $1.7 billion, while LFL sales for the nine-month period grew by 2.2 percent, totaling $5.3 billion. The UAE experienced a strong revenue increase of 7.5 percent in Q3 2024, primarily driven by healthy LFL growth of 4.7 percent during the quarter, supported by favorable market conditions in the region. During the first nine months of 2024, three new stores were launched.
Growth in Saudi Arabia
In Saudi Arabia, revenue grew by 5.7 percent to $369.3 million in Q3 2024, thanks to enhancements in Lulu’s fresh food offerings, tailored to meet the rising demand for fresh products in the Kingdom. In the nine-month period, five new stores were opened in Saudi Arabia, which included two hypermarkets, two Express stores, and one mini market.
Oman, Kuwait, and Bahrain also recorded strong revenue growth, while Qatar maintained stable revenue and upheld its leading market share position.
E-commerce sales surge
Omnichannel strategies remain a central focus for Lulu, with e-commerce sales soaring to $237.4 million during the nine-month period, reflecting an impressive year-over-year increase of 83.5 percent. E-commerce now accounts for 4.3 percent of total retail sales.
EBITDA and profitability metrics
For Q3 2024, EBITDA stood at $176.3 million, an increase of 9.9 percent from the previous year, yielding an EBITDA margin of 9.5 percent, which represents an approximate 30 basis points improvement year-over-year. This strong EBITDA performance was supported by gross margin expansion of around 130 basis points in Q3 2024, driven by an enhanced product mix and increased sales in higher-margin categories, including Private Label products, which now constitute 29.3 percent of total retail sales, up from 28.6 percent in Q3 2023. Lulu’s Private Label offerings encompass fresh food, consumer packaged goods, lifestyle products, and electrical goods.
Net profit growth
Net Profit from Continuing Operations surged to $35.1 million for the Q3 period, marking a 126.0 percent increase, bolstered by improved operating profit and effective cost management. For the nine-month period, Net Profit from Continuing Operations rose by 73.3 percent to $151.5 million.
Continued focus on expansion investments
Capital expenditure for continuing operations reached $98.5 million during the nine-month period of 2024, accounting for 1.7 percent of total sales. This expenditure was primarily directed towards the opening of 12 new stores, including five in Saudi Arabia and three in the UAE, the company’s two largest markets. Capex as a percentage of sales was 1.7 percent for 9M 2024, compared to 1.9 percent for the same period in 2023, reflecting fewer store openings and a gradual shift towards a more asset-light model requiring less capital expenditure.
As of September 30, 2024, Net Debt totaled $2.54 billion, resulting in a Net Debt/EBITDA ratio of 3.2x on an IFRS-16 basis. Excluding leases, the Net Debt/EBITDA ratio remained stable at 1.4x, positioning the company strongly for ongoing growth investments.
Read more: Abu Dhabi’s Lulu starts trading on ADX following $1.72-billion IPO
Store and Loyalty Program expansion
In the nine-month period of 2024, Lulu Retail launched a total of 12 new stores, with three express stores opening in Q3 2024, adding a cumulative total of 8,033 square meters of selling space during the quarter. By September 30, 2024, total selling space reached 1.3 million square meters.
Lulu’s Happiness Loyalty program continues to gain momentum, now active across all GCC countries, boasting approximately 5.0 million members by the end of the nine-month period.
Following this reporting period, Lulu announced a strategic partnership with Abu Dhabi’s Modon Holding to develop retail facilities, including hypermarkets, supermarkets, and other retail stores. Additionally, Lulu opened five more stores, bringing the total number of new stores launched in 2024 to 17.
Stable outlook maintained
Lulu Retail’s growth strategy centers on four key pillars: enhancing its existing store network, expanding its store presence, driving operational efficiencies, and boosting revenue through private label and loyalty program expansions. The company remains committed to meeting its 2024 guidance as outlined during its IPO announcement.
Diverse store formats
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,” he further added.
Strategic market expansion
Moreover, 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 Program 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 program 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.”
