ABU DHABI: Lulu Retail, listed on the Abu Dhabi Securities Exchange (ADX), is set to pivot away from the traditional mall-based model for its future growth, opting instead for an asset-light strategy aimed at boosting competitiveness in a price-sensitive retail market.
Speaking to businessbenchmark.news exclusively, a senior executive of Lulu group confirmed that Lulu Retail’s upcoming expansion will be designed to reduce capital intensity – a notable departure from its India strategy, where mall-based expansion remains central.
The shift comes amid a revealing contrast in Lulu Retail’s financial profile. Despite the UAE accounting for 60 per cent of the company’s total assets and a staggering 85 per cent of its net worth as of March 31, 2025, the region contributed just 35 per cent to its total revenue in the first quarter.
Lulu Retail posted $2.08 billion in total revenue for Q1 2025, of which the UAE contributed only $741.87 million.
In contrast, other markets including newer GCC markets – while accounting for just 40 per cent of the company’s assets – delivered nearly 65 per cent of the revenue, underscoring a more efficient asset-to-revenue ratio.
As of March-end, the UAE operations of Lulu Retail held $5.5 billion in assets, with liabilities of $2.06 billion, resulting in a net worth of $3.44 billion. This is nearly 85 per cent of the company’s total net worth of $4.02 billion – yet the revenue performance doesn’t align with that heavy asset base.
“This stark imbalance illustrates why asset-heavy retail formats may no longer make economic sense,” the executive said. “Consumers today are driven by value – not the retail setting. Be it a mall or a corner store, price is what matters. The pandemic only reinforced this behavior,” an analyst noted.
Borrowings marginally down
The group’s marginally reduced borrowings – from $974.35 million a year ago to $920.99 million as of March 2025 – signal some effort towards financial prudence. However, as retail competition across the region intensifies, the need for nimble, cost-efficient models is more urgent than ever.
Lulu Retail has announced that it will focus on operational efficiency, private label expansion, and loyalty programs to strengthen margins. During Q1 2025, the group added 22,000 sq metres of retail space through five new store openings.
Net profit for the quarter stood at $69.70 million, down from $93.08 million in Q1 2024. However, last year’s number included $32.92 million from discontinued operations, making the current profit broadly stable on a like-for-like basis.
Lulu Retail is 70 per cent owned by Lulu International Holdings Ltd, registered at Abu Dhabi Global Market.
As retail dynamics evolve, the key question remains: will Lulu Retail fully embrace the asset-light path to sustain profitability and relevance – especially in markets like the UAE, where asset deployment has outpaced revenue generation?
