Alshaya Group to downsize operations in Egypt due to USD liquidity shortage

Alshaya Group, a major retail brand operator in the Middle East, has chosen to shut down several of its stores in Egypt due to the economic situation and the devaluation of the local currency in the largest Arab market in terms of consumer numbers.

Alshaya informed store employees in a letter that due to the economic situation in Egypt, including currency decline, exchange rate pressures, and high inflation, they were compelled to reduce their operations in the country.

Egypt is currently experiencing a challenging economic crisis, which has been made worse by geopolitical tensions in neighboring countries. This is further compounded by a severe shortage of US dollars, caused by a drop in remittances from overseas workers, reduced tourism earnings, a decline in revenue from the Suez Canal, and a decrease in exports. The official exchange rate is 30.9 Egyptian pounds to the dollar in banks, but on the black market, it has risen to 56 pounds.

In the letter addressed to the store employees in Egypt, Alshaya Group made it clear that the presence of the (Debenhams) brand in Egypt will come to an end by the end of February 2024. This means that both physical stores and e-commerce operations will be discontinued. The company expressed gratitude towards the employees for their unwavering support throughout their tenure. Alshaya Group assured the employees that they will remain engaged and keep them informed about any progress or updates regarding the closure and exit from the market.

An official from Alshaya Egypt has confirmed the validity of the letter and its contents to the "Alsharq Business Bloomberg" website. Additionally, the official stated that the company has made the decision to let go of approximately 375 employees in Egypt, out of a total workforce of 2,000 employees in the country. Furthermore, they will be closing down 5 brands and reducing the number of branches for 3 other brands. Moreover, the company will be discontinuing two online sales platforms, out of a total of 12 brands that they operate in Egypt.

The Russian-Ukrainian war in February 2022 has resulted in a significant outflow of indirect foreign investments from Egypt. This particularly affected the stock market and government debt instruments, causing an estimated loss of around $22 billion, as reported by the Ministry of Finance. Additionally, the rise in interest rates in the United States and Europe has prompted investors to shift away from emerging economy debt markets.

Partial closure for Alshaya Egypt brands

A confidential source from one of Egypt's largest commercial centers revealed to "Alsharq Business Bloomberg" website that the Alshaya Group has recently made a significant announcement. While some stores like "The Body Shop," "Debenhams," "Mother Care," and "Pinkberry," will be completely closed, there will be a partial closure for H&M, Victoria's Secret, American Eagle, and Bath & Body stores. Alshaya Group, founded in 1890, is renowned as one of Kuwait's oldest companies and a major player in the Middle East's retail industry.

According to another insider from a renowned shopping center in Egypt, efforts are underway to negotiate with the Alshaya Group in order to persuade them to reconsider their decision. The aim is to minimize the losses incurred in Egypt. Interestingly, some brands had previously left Egypt before the currency exchange was liberalized in 2016. However, they returned when conditions improved.

With a vast presence spanning from Dubai to Turkey and Russia, Alshaya Group operates over 4,000 stores and boasts nearly 70 well-known brands. In addition to its physical stores, the company has a strong digital presence with over 100 websites and applications. With a workforce of over 50,000 employees, Alshaya Group continues to leave its mark in the retail industry.