Slow economy leads to seventh quarterly loss in a row for Marka

Marka posted its seventh quarterly loss in a row amid a “challenging” retail economy and a slow month during Ramadan.

The company widened its losses to Dh18.72 million in the second quarter, compared with a Dh2.14m loss a year ago, it said.

Despite frequent assurances to investors that the company expects to become profitable this year, Marka has not yet registered a quarterly profit since the company was floated about two years ago.

Marka listed its shares in 2014 as a greenfield company with no track record, but with a promise to enable small investors to buy a slice of the UAE’s booming retail and dining industries.

Since then it has been on a buying spree, snapping up businesses and brands including Retailcorp, a majority stake in children’s activity company Cheeky Monkeys, and the sports memorabilia company Icons.

In May the company opened the world’s first Harper’s Baz­aar Cafe in Dubai Design District to add to a stable that includes a vast Uefa Champions League-themed cafe in Yas Mall and restaurant chain Reem Al Bawadi.

But Marka’s ambitious expansion has come at a time when GCC retail markets have come under pressure because of the strong US dollar, to which the dirham is pegged, making purchases more expensive for many visitors. The low oil price has also hit dom­estic spending.

Marka’s losses for the first quarter this year stood at Dh18.13m.

“Our efforts are seeing fruition in building profitable trading platforms for 2017 and beyond,” said Khaled Almheiri, the company’s vice chairman and managing director. He said the results reflected a challenging retail economy and slow sales during Ramadan.

Marka, which operates more than 50 outlets across its portfolio of hospitality, sports and fashion and beauty brands, said second-quarter revenue reached Dh89.5m, up 18.2 per cent compared with the second quarter last year.

The company said it planned to open 19 new outlets this year, including four Reem Al Bawadi restaurants and three Cheeky Monkeys Playland and Sweet Surprises outlets in the UAE.

Marka shares closed at Dh1.12 on the DFM yesterday, unchanged from the day before.

News of Marka’s losses came on the same day that the Emirates NBD Economy Tracker Index reported that retail activity in Dubai was the best performing sector of the economy last month.

“Since the end of last year firms in the retail sector have been cutting prices, which has gone some way to supporting business activity but is putting pressure on retailers,” said Khatija Haque, the head of Mena research at Emirates NBD.

“Margins across the sector are being squeezed.”

Development company Gates Hospitality predicted earlier that competition among the increasing number of cafes and restaurants in the UAE would lead to 20 per cent of these going out of business this year.


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