Saudi retailer's figures set scene for optimism

What's up: Jarir Marketing Company, a Saudi Arabia-based retailer reports higher second quarter profits and sales from iPads and iPhones.

Jarir Marketing Company's latest results bode well for shares as the retailer based in Saudi Arabia reported a 30 per cent jump in profit for the second quarter driven by robust sales of smartphones and tablets.

Net income for the second quarter was 98.5 million Saudi riyals. The company is paying a dividend of 2 riyals per share for the second quarter.

Total sales growth year on year was 44 per cent in the second quarter, driven by iPhone and iPad sales, which grew 150 per cent and 50 per cent, respectively. "We believe that all segments' sales grew, but we attribute this outstanding growth to the faster than expected growth in smartphones and tablets sales," said Khalid Alruwaigh, the acting head of equity research at Al Rajhi Capital in Riyadh.

Driven by a rising population, improving education and changing lifestyle, Saudi Arabia's retail sector is expected to continue growing. Jarir has a strong position in books, office and school supplies, and electronics.

The two-month salary bonus provided by King Abdullah to employees in the government sector, designed to cool social and political disquiet in the kingdom, has played a vital role in driving sales growth, Mr Alruwaigh said.

The expected launch of a new iPhone model this year is likely to keep smartphone sales robust during the fourth quarter and first half of next year.

"Driven by smartphones and tablets sales, coupled with under-penetrated internet market in the kingdom, we believe that Jarir has at least 12 to 18 months of double-digit same-store sales growth," Mr Alruwaigh said.

On June 29, Jarir announced the opening of a new store in Hofuf city. The company said it would open two stores, in Mecca and Yanbu, during the second half of this year, at an estimated cost of 50m riyals. So far this year, Jarir has risen 12.8 per cent on the Saudi Tadawul exchange to 169.75 riyals a share.