Lulu targets 10% revenue boost in 2024 as ADX flotation looms

Retail giant plans to open eight stores in the UAE, Saudi Arabia and Oman this year

Yusuff Ali, chairman of Lulu Group, said the IPO will not have any impact on its pricing model. Victor Besa / The National

UAE retail giant Lulu Group expects up to 10 per cent revenue growth this year with plans to open new stores in the Gulf region as it moves forward with its initial public offering on the Abu Dhabi Securities Exchange.

This week, Lulu Group revealed plans to list 25 per cent of its share capital on the Abu Dhabi bourse amid the continued economic momentum and listing boom in the Emirates.

The hypermarkets operator plans to float 2,582,226,338 shares with a nominal value of Dh0.051 ($0.014) each, it said on Monday. All shares offered through the public float are being sold by the company’s sole shareholder, Lulu International Holdings.

The company projects 8 to 10 per cent annual growth in revenue for this year, as it continues to grow its business, its chief financial officer Prasad KK told The National.

“The UAE is our main market and KSA [Kingdom of Saudi Arabia] is our growth market. We are growing across the two markets,” he said.

The company's revenue in the first half of this year rose 5.6 per cent to $3.9 billion, after it reported a 5.6 per cent annual increase in revenue last year to $7.3 billion.

The UAE accounts for 36 per cent of its total revenue, followed by Saudi Arabia at 19 per cent and Oman at 17 per cent, he added.

The company did not announce the price range or how much it plans to raise through the IPO but its chief executive Saifee Rupawala said there has been an “immense response” for the IPO from international as well as regional and local investors.

The subscription period for the public float will open on October 28 and will end on November 5 for retail, institutional and senior executive tranches.

The final offer price will be determined through a book-building process and Lulu Group expects its shares to begin trading on the ADX “on or around” November 14, according to a previous statement from Lulu.

The Abu Dhabi-based company, which had 240 stores as of August, plans to open an additional eight this year in the UAE, Saudi Arabia and Oman. It has opened 13 stores in the Emirates so far this year and aims to add about 19 outlets in 2025, mainly in the UAE and Saudi Arabia.

“We have got a lot of opportunity to expand, especially in Saudi Arabia and the UAE,” Ashraf Ali, executive director of Lulu Group, told media in Abu Dhabi on Tuesday.

“Saudi Arabia is the biggest market … so we have got a big room to develop there. We are only present in 14 cities. We have identified 33 cities to develop in Saudi Arabia even in the interior pockets and clusters and secondary cities.”

Saudi Arabia is diversifying its economy away from oil as part of its Vision 2030 programme and is focusing on attracting more foreign investment into the kingdom in sectors including retail, tourism, technology and property.

“When you look into the UAE perspective, there is a lot of development … a lot of migration is happening. We are already working with all our real estate developers that will expand our portfolio,” Mr Ali said.

No impact on prices

MA Yusuff Ali, chairman of Lulu, said the IPO will not have any impact on its retail pricing model and the group will continue to maintain competitive rates across it outlets.

The priority is the availability of products and “we want to bring the competitive price in good quality. Now we are doing that, so we hope that this will continue”, he said during the media briefing.

Lulu sources food products from 90 countries and will continue to “support our consumers” with an uninterrupted supply of goods, the chairman added.