DUBAI, (Reuters) – Gulf supermarket chain Spinneys will cross the $1 billion revenue mark in two years and is looking to expand further in the Middle East, its chief executive said on Sunday.
Un-listed Spinneys, which began operations in 1924 in Egypt, have seen its revenues growing by around 20 percent since 2007 in Lebanon, while in Egypt it is seeing even larger figures, Chief Executive Michael Wright told Reuters in an interview.
“We anticipate that by 2013 our annualized revenue will be at $1 billion,” he said.
Spinneys, in which Dubai private equity firm Abraaj Capital holds a controlling stake, is seeing strong growth at a time of regional turmoil in the Gulf Arab world and a slowdown in global economic growth.
“Retailing is quite resistant to these things – people have to eat,” Wright said.
Last week, Spinneys opened the first of four new grocery retail outlets it plans to unveil in Lebanon over the next six weeks as part of a regional expansion strategy. The capital expenditure of this first phase was $24 million.
Wright said that the company plans to open an additional four stores in Lebanon, three in Qatar, two in Jordan and at least three in Egypt by 2013.
For Wright, expanding the supermarket chain is central to growing profits.
“Profitability comes with scale and the fact is that we’re growing so much,” Wright said.
“(Our operations in) Egypt and Lebanon are profitable, and Qatar will become profitable this year.”
Spinneys had planned to further expand into new territories within the Middle East, but the unexpected political uprisings of the Arab Spring that have rocked the region since December pushed those plans back.
“The timeline has been affected by the Arab spring. We have plans for projects in Libya, Syria and Tunisia, but had to wait until things settled down,” Wright said.
While there are currently no plans for Abraaj Capital to sell its share in the company, Spinneys is keen to stay in shape for any investment opportunities that do arise.
“Private equity firms are never in for a very long term. (Due to) that strategic planning has to be about growth and profit that creates a shareholder value that becomes an exit price. We live this in all our strategy,” said Wright, who has been with the company since 1987.
However, he dispelled suspicions of an imminent initial public offering, citing timing issues.
“It’s not imminent. The markets are not really ready for an IPO at this time. The economic crisis and Arab Spring made this difficult.”