Riyadh-Mubasher: Al Rajhi Capital reinstated its 'Overweight' rating for Fawaz Alhokair, revising its price target to SAR 67.4 per share.
Alhokair reported flat year-on-year revenues, with like-for-like (LFL) revenue for domestic stores (74% of revenue in Q3-16) being weaker than expected, the research firm said.
It added that the LFL trend witnessed in the last couple of quarters points to waning of discretionary spends, which in the short to medium term should continue to impact revenue growth of domestic stores.
"International operations are continuing to be impacted by currency depreciation and restructuring costs (SAR 18 million for Blanco this quarter),"Al Rajhi Capital said.
However, the company is taking measures to ramp up merchandising and productivity in Saudi Arabia. It will also optimise supply chain and distribution capabilities and turn around US and Blanco operations which will lead to improved profitability.
