Earnings Report /
Saudi Arabia

BinDawood Holding: Earnings call summary

  • During the quarter, the company opened its first two Danube express stores at the Haramain railway stations

  • The company has completed the acquisition of Ykone and ITAC

  • The mega store will be supported by smaller format dark stores to provide less than an hour delivery

SNB Capital
28 August 2022
Published bySNB Capital

Financial performance

  • Total revenue increased by 8.7% yoy (+3.9% qoq) to SAR1.22bn in Q2 22, mainly driven by the return of pilgrims for Hajj and Umrah, coupled with marketing and promotions carried out during Ramadan seasons.

  • Sales of BinDawood stores increased by 32% yoy due to higher footfalls of Haramain stores. Non-Haramain BinDawood stores sales increased by 4.7% yoy, while Danube stores’ sales declined by 0.5% yoy (+8.2% qoq).

  • Gross profits decreased by 5.3% yoy to SAR378mn in Q2 22, while gross margins dropped to 31.0% vs 35.6% in Q2 21 due to the combined affect of marketing campaigns in Ramadan period and loyalty program activities and management’s decision to reduce margins in certain product categories to generate higher sales.

  • Adjusted EBITDA decreased by 19.3% yoy to SAR173mn in Q2 22, while adjusted EBITDA margins dropped to 14.1% in Q2 22 vs 19.1% in Q2 21. The decline in EBITDA and margins was driven by lower gross profits, costs associated with the opening of new stores and costs related to the acquisition of AITC and Ykone.

  • Net profits decreased by 55.5% yoy to SAR42.3mn in Q2 22 while net margins dropped to 3.5% vs 8.5% in Q2 21. The decrease in net income and margins was mainly driven by the decline in gross profits and increased opex due to aforementioned reasons.

  • Adjusted CFO decreased by 65.5% yoy to SAR145mn vs SAR420mn in Q2 21, mainly due to increase in inventory.

  • The board of directors have approved a half-yearly dividend of SAR103mn, representing  SAR0.90 per share.

  • The company remains debt free with a healthy cash balance of SAR723mn at the end of Q2 22.

Operational performance:

  • During the quarter, the company opened its first two Danube express stores at the Haramain railway stations. As a result, total store count increased to 80, consisting of 52 hypermarkets and 26 supermarkets.

  • Customer count in Q2 22 increased by 20.2% yoy to 12.5mn vs 10.4mn in Q2 20, largely attributable to the return of pilgrims in Makkah and Madinah stores during Ramadan and Hajj Season.

  • Average basket size dropped by 8.7% yoy to SAR97.4 in Q2 22 compared to SAR106.7 of Q2 21. BinDawood’s average basket size dropped to SAR83.0 in Q2 22 from SAR88.0 in Q2 21, while Danube’s basket size reduced to SAR112 from SAR122 in Q2 21.

  • Registered loyalty customers count have surpassed 2.3mn vs c1.0mn in Q1 22, which indicates the success of recently introduced omnichannel customer loyalty programme.

M&A activity

  • The company has completed the acquisition of Ykone and ITAC which will help BDHS to accelerate ecommerce business growth and strengthen omnichannel presence.

  • AITC was valued at cSAR173mn and the company paid cSAR107mn for the acquired 62% stake in the company.

  • The management stated that it will consolidate the impact of these acquisitions in company’s financials from the start of Q3 22.

  • The company expects the impact of these acquisition will be impact on company’s top-line and margins.

  • The company stated that they focused on e-commerce related acquisitions by considering the changing consumer behaviour towards online purchases and to gain better market share in the E-commerce space. However, the upcoming M&As will be focused on offline retail segment.

  • During Q2’22 the company booked cSAR2mn expenses related to these acquisitions in the first half of 2022 while the remaining part will be included in the coming quarters.


  • By reducing the margins on certain product categories, the management took the hit on its overall margins to bring back the customers after Covid induced demand in 2020 and 2021.

  • The company expects the impact of Ramadan campaigns and other promotional campaigns will be regularized going forward.

  • The company has started the construction of a fully automated MEGA dark store which is expected to be commissioned by the end of FY22.

  • The mega store will be supported by smaller format dark stores to provide less than an hour delivery.

  • The company is discussing a JV with a major logistic provider in the region for running and managing the dark stores business.

  • The company believes the upcoming back-to-school season will have a positive impact on its Q3 22 performance.

  • The management does not expect any major risks from FIFA World Cup in Qatar on its volume targets.

  • The company expects the LFL growth to continue as it expects normalcy in return of pilgrims, but the rate of growth is likely to slow down.

  • The company expects to maintain the annual gross margins in the range of 32% to 34% in the coming years.

  • As the effect of inflation and supply chain issues is easing, the company expects decline in input and logistics costs.

  • The company plans to open 8 more Danube stores including 2 express stores, 1 hypermarket in Bahrain; 1 supermarket in Riyadh, 2 supermarkets in Jeddah, 1 hypermarket in Tabuk and 1 pastry shop in Jeddah

  • The company is planning to open 3 more dark stores by the end of 2022.

  • The company is exploring further M&A opportunities in other geographic regions.