A. SREENIVASA REDDY (ABU DHABI)
Lulu Retail Holdings was able to withstand the impact of regional developments through new store openings and growth in e-commerce during the first quarter of 2026.
“Solid growth in January and February is offset by a slowdown in March, primarily driven by weaker non-food demand amid evolving geopolitical conditions,” the company said in its management discussion and analysis report.
Lulu Retail, the largest pan-GCC full-line retailer, reported revenue of $2.02 billion in the first quarter of 2026, down 2.9% from $2.08 billion in the same period last year.
Gross profit declined to $449.2 million from $464.5 million a year earlier, while EBITDA fell to $210 million from $231.7 million in the first quarter of 2025. Profit before tax dropped to $53.5 million from $78.5 million, and net profit declined to $46.8 million from $69.7 million.
The company said the softer performance was largely due to weaker discretionary non-food demand, particularly in March, amid a more cautious consumer environment. Consumer packaged goods and fresh food categories, however, continued to record growth during the quarter.
Despite the challenging environment, Lulu opened 11 new stores during the quarter, including six in the UAE, two in Saudi Arabia, two in Kuwait and one in Oman, adding more than 20,000 square metres of retail space.
The company said it remained on track to meet its full-year target of opening 18-20 stores. The expansion continued to focus on the Express format, which it described as a more capital-efficient and scalable growth model.
E-commerce emerged as a major growth driver, with sales surging 61% year-on-year to $150 million, accounting for 7.9% of total retail sales compared to 4.8% a year earlier. Transaction volumes on Lulu’s own digital platforms broadly doubled following app and website enhancements.
Private label products also gained traction as consumers sought value-oriented offerings. Private label penetration increased by nearly 1 percentage point to 30.2% of retail sales, helping support margins during the quarter.
The Happiness loyalty programme continued to expand, with linked sales reaching around 70% during the quarter after the addition of 610,000 new members. Total membership reached approximately 9 million across GCC markets.
Saifee Rupawala, Chief Executive Officer of Lulu, said: “We are proud to have served our customers throughout a difficult period of time. The fact that our stores have all remained open for business and well stocked is testament to the hard work of our staff alongside support across the six GCC countries.
“The year started well, but some slowdown in department stores was seen in March. Nevertheless we have been able to open 11 new stores and are confident that we have the platform and offering for our customers which will deliver growth as trading conditions normalise."
Lulu said proactive contingency planning ensured uninterrupted operations throughout the quarter, with all stores remaining open and fully stocked despite regional disruptions.
The company added that operating expenses excluding depreciation rose only 1.1% year-on-year due to ongoing cost discipline and efficiency initiatives, even as new stores were added.
Lulu said it is reviewing its full-year 2026 guidance in light of the evolving geopolitical environment, although its store opening plans remain unchanged.