Dubai retailer Marka widens losses in Q1 as revenues fall

Marka, the Dubai-based retailer working to pay down years of losses, widened its losses further in the first three months of 2019, amid an ongoing restructuring.

First-quarter losses stood at Dh295.8 million, compared to Dh242.7m in the year-earlier period, the company said in a filing to the Dubai Financial Market, where its shares are listed.

Revenue for the quarter stood at Dh77m versus Dh99.6m a year earlier - a 29 per cent year-on-year decline.

Marka, which counts fashion, sports and food retailers including Reem Al Bawadi and Morelli’s Gelato among its brands, has not made a profit since listing on the Dubai stock exchange in 2014.

The firm said in its filing that the smallest cash generating units are its restaurants, but it gave no particular reason for the widening losses in the last quarter. Of the restaurants, the Reem Al Bawadi brand name “is considered to have an indefinite useful life as it has been active in the market for a considerably long period of time and management has no intentions of discontinuing use of the brand”, the filing said.

Meanwhile, the group has a franchise agreement with Morelli’s Gelato to operate and sell ice cream under the Morelli brand name exclusively in the UAE, Saudi Arabia, Bahrain, Kuwait and Qatar. A franchise agreement from the acquisition of Morelli’s, equating to Dh13.7m, has been written off during the current year, according to the filing.

In 2017, Marka began a restructuring programme including selling stores and cutting operational costs, and more recently has said it is considering all available options for capital restructuring, and seeking a strategic partner to invest capital in the company.

Last month, Marka said a planned share capital reduction of Dh450m will go ahead, following shareholder approval in March. The proposal to decrease its capital to Dh49.87m, from Dh500m, is intended to help extinguish Dh450m of accumulated losses, by increasing shareholder value and producing a more efficient capital structure, Marka said at the time.

In April, Marka’s creditors were invited to deliver documents detailing debts owed to them within the ensuing 30 days.

Updated: May 12, 2019 07:13 PM