Dubai-based food retailer Spinneys has revealed its financial performance for the three-month and nine-month periods ending on September 30, 2024. During this nine-month span, revenue reached AED2.3 billion ($626.2 million), marking an 11.4 percent increase compared to the same timeframe in 2023. Profit before tax surged by 27.1 percent to AED203 million ($55.3 million), while profit for the period rose by a substantial 14.6 percent, totaling AED182 million. This performance underscores Spinneys’ excellent margin profile and operational efficiency. In the third quarter of 2024, the company distributed an interim dividend of AED102.6 million, equating to 2.85 fils per share, to its shareholders.
Spinneys continues to leverage its strong brand equity and strategic positioning, maintaining growth momentum throughout the year. In September, the company was honored at the esteemed Retail Middle East Awards, receiving accolades for ‘Most Admired Grocery Retailer of the Year’ and ‘Market Expansion of the Year’ due to its successful entry into the Saudi Arabian market. Additionally, according to the latest “Advantage Report” from Advantage Group, retail industry suppliers ranked Spinneys as the top performer in Partnership, Reputation, and Vision within the UAE.
Expansion in the UAE and Saudi Arabia
Sunil Kumar, chief executive officer, Spinneys, remarked that they were thrilled to report a robust performance year-to-date, with revenues reaching unprecedented levels and strong profitability metrics both before and after tax. He noted that everyone at Spinneys was fully dedicated to realizing their ambitious growth objectives as they expanded their presence in the UAE, accelerated initiatives in Saudi Arabia, introduced new concepts, and enhanced their e-commerce capabilities. Kumar emphasized that efficiency was central to their business model and that favorable macroeconomic conditions continued to secure advantageous supplier agreements, optimize their supply chain, and deliver some of the most appealing margins in the industry. He stated that as they diligently pursued sustained and profitable growth, their unique premium fresh positioning distinctly differentiated them, and this foundation was what they were using to build their future.
Revenue growth overview
For the nine-month period ending September 2024, revenue climbed by 11.4 percent year-on-year to AED2.3 billion, propelled by like-for-like sales growth of 11.1 percent, along with the opening of four new locations since October 2023: The Kitchen by Spinneys in Dubai Mall, Spinneys Al Khawaneej (Dubai), Spinneys Sobha (Dubai), and Spinneys La Strada (Riyadh). E-commerce contributed 14.5 percent of total revenue during this period. In the third quarter of 2024, revenue increased by 14.9 percent year-on-year to AED701 million, with strong momentum from the first half of the year continuing into the third quarter.
Profitability
Gross profit rose by 12 percent year-on-year to AED948 million for the nine-month period, maintaining a stable gross profit margin of 41.2 percent. This achievement was facilitated by effective sourcing and supply chain management, alongside Spinneys’ successful private label strategy, which emphasizes the sale of high-margin products.
Adjusted EBITDA
Adjusted EBITDA reached AED421 million in the first nine months of 2024, reflecting an 8.8 percent year-on-year increase, with an Adjusted EBITDA margin of 18.3 percent. This figure further includes the effects of one-time IPO-related costs incurred in the first half of 2024 and over AED10 million in pre-opening expenses in Saudi Arabia. Profit before tax increased by 27.1 percent to AED203 million, corresponding to an 8.8 percent profit before tax margin, while profit for the period grew by 14.6 percent to AED182 million, representing a 7.9 percent net profit margin, despite the impact of the new 9 percent Corporate Tax introduced in the UAE.
Transaction growth
Moreover, the number of transactions grew by 9.8 percent year-on-year, totaling 27 million in the first nine months of 2024, reflecting a rise in customer demand supported by favorable macroeconomic conditions.
The average basket size remained stable, increasing by 1 percent year-on-year, driven by sustained customer demand.
Store network expansion
Spinneys has made significant strides in its store expansion efforts. Following the opening of four new stores since October 2023, the company has secured 12 signed leases in the UAE and Saudi Arabia to further bolster its network and capitalize on the promising growth opportunities in both markets. Additionally, Spinneys has completed refurbishments and expansions at select locations, increasing the size of Spinneys RAK Al Hamra and Waitrose Saadiyat Beach by 26 percent and 51 percent, respectively, while also introducing meal solutions and health & beauty sections.
Operational efficiencies and digital transformation
In the third quarter of 2024, Spinneys launched a new warehouse facility in Kezad (UAE), enhancing storage capacity by 220 percent. The company has also upgraded the central production capabilities of The Kitchen by Spinneys to support future locations and supply essential products to selected stores. Since the start of 2024, Spinneys has made notable advancements in enhancing customer convenience through the ongoing expansion of Spinneys Swift, its hyperlocal delivery service. This service now covers 31 percent of the e-commerce catchment area and accounts for 18 percent of total e-commerce sales on its platform, reinforcing Spinneys’ commitment to meet customer expectations with a 60-minute delivery promise.
Food Tech Valley partnership
In October 2024, Spinneys entered into a 27-year agreement with Food Tech Valley, a UAE government-led initiative aimed at creating a sustainable food ecosystem. Under this agreement, Spinneys plans to establish a cutting-edge 500,000 square foot food processing facility, expected to be operational by 2027. This investment is anticipated to enhance the UAE’s domestic food production capacity and reduce dependence on imports.
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