Looks to boost sales by 30 per cent this year and expand its regional footprint with new stores in Qatar and Abu Dhabi
Al Sayegh aims for a solid year
Al Sayegh Brothers, whose retail brands include the electronics stores E4U and Klik, aims to boost sales by 30 per cent this year and expand its regional footprint with new stores in Qatar and Abu Dhabi. But an increasingly competitive market will put extra pressure on profits this year as electronics retailers continue to cut prices, said Ahmed Ashraf, a business head at the Dubai-based company.
"The retailers have been overly competitive," he said. "I feel the consumer still has the power to pay a little bit more, but the retailers are literally in a self-assumed competition and driving the market down," he said. The consumer electronics market in the UAE last year slowed significantly as consumers cut back on unnecessary purchases. Consumers in the Emirates spent Dh2.19 billion (US$596.2 million) on items such as TVs and DVD players, 33.8 per cent less than in 2008, the consultancy GfK Retail and Technology reported.
While the number of consumer electronic devices bought last year rose 1.5 per cent, the total value declined because of retail price discounts. For Al Sayegh, whose product lines include Olympus, Acer, Gateway and LG, turnover last year rose by about 30 per cent, while profit declined by 3 to 5 per cent, Mr Ashraf said. A recovery may be under way. In the first quarter of this year, sales of consumer electronics rose 9.3 per cent from the same period last year, with sales of Dh655m, figures from GfK Retail and Technology show.
While sales have not returned to the peaks of 2008, Al Sayegh expects its total turnover to grow by 30 per cent as it continues to expand. "Of course, compared to the previous numbers and compared to the previous margins, the margins are less and the competition is more," Mr Ashraf said. "But there is business. We have not gone bankrupt, and this economy, this country, is still churning out business."
Al Sayegh plans to open an E4U store and a Klik store in Abu Dhabi this year, an E4U store in Yas Mall next year and the company's first retail store in Qatar by 2012, Mr Ashraf said. Still, a challenging market environment means the family-owned company will delay going public until after the economy has emerged solidly from the downturn, he said."I don't think there are a lot of investors out there right now."