The Saudi stock market witnessed an important announcement regarding the performance of one of the largest retail companies, as Sinomy Retail (FAK International) recorded a significant increase in losses during 2025. According to official data, losses jumped by 148.4% to reach SAR 505.5 million, compared to losses of SAR 203.5 million in 2024.
The company's journey and strategic transformations in the retail sector
Sinomy Retail, formerly known as Fawaz Alhokair, is one of the leading and largest retail and franchise companies in Saudi Arabia and the Middle East. Over the past few years, the traditional retail sector has faced rapidly evolving global and local challenges, prompting the company to adopt a comprehensive strategic transformation program. This program included divesting some non-core brands and closing unprofitable stores, with the aim of improving operational efficiency and focusing on leading brands that meet consumer expectations and align with the Kingdom's economic development under Vision 2030.
Key factors behind Sinomy Retail's worsening losses in 2025
The company explained in its statement published on the Saudi Stock Exchange website that this decline in annual financial performance is due to several key factors, despite the presence of some positive indicators at the level of operating revenues:
- Gross Profit Growth: Gross profit reached SAR 579.6 million, an increase of 2.5% compared to SAR 565.6 million in the previous year. This was supported by a 5.3% growth in group revenues and the effective implementation of the cost optimization program.
- Reduced expenses: Selling, general and administrative expenses decreased by 4.8%, reflecting the success of cost improvement measures.
- Other operating income declined by 65.8% year-on-year to SAR 88.1 million. This was primarily due to the absence of non-recurring capital gains (SAR 211 million) realized in 2024 from the divestment of certain brands.
- Other operating expenses increased: They jumped to SAR 173.2 million compared to SAR 10.6 million, as a result of settling tax liabilities, recording foreign exchange losses, and writing off assets.
- Decrease in goodwill value: A decrease in goodwill value of SAR 120 million was recorded during the year, compared to SAR 95.4 million in 2024.
Financial performance analysis for the fourth quarter of 2025
For the fourth quarter of 2025, the net loss attributable to the company's shareholders was SAR 295.0 million, compared to a loss of SAR 150.6 million in the same quarter of 2024, and compared to SAR 124.9 million in the third quarter of 2025. These quarterly results are attributed to:
- Gross profit decreased by 15.8% to reach 162.8 million riyals. Despite the increase in sales thanks to year-end promotions, the associated costs increased, in addition to an increase in variable rental expenses.
- Selling and administrative expenses rose by 3.9% to reach 123.8 million riyals, driven by increased advertising and promotion expenses.
- Other operating expenses increased to SAR 65.6 million due to asset write-offs and tax settlements.
- In contrast, other operating income rose to SAR 23.8 million thanks to discounts on rental liabilities.
Expected impact on the local market and business sector
These financial results hold significant implications for the Saudi Stock Exchange (Tadawul) and investors in the retail sector. In the short term, these losses may negatively impact investor sentiment towards the stock. However, the company's continued efforts to clean up its balance sheet by writing off assets and divesting unprofitable brands are crucial for recovery. Regionally, the company's performance reflects the challenges facing the import- and franchise-dependent retail sector amidst fluctuating exchange rates and operating costs. Nevertheless, the company's focus on improving efficiency could pave the way for a return to profitability in the coming financial periods, particularly given the strong purchasing power in the Saudi market.
