Kuwait’s Alshaya Group, one of the largest retailers in the Middle East, announced the closure of several of its retail franchises in Egypt due to economic challenges and the devaluation of the Egyptian Pound.
“Due to the economic situation over the past three years and the challenges facing our business in Egypt, including the currency devaluation, exchange rate pressures, and high inflation, we have been compelled to make the difficult decision to scale down our operations in the country,” the company revealed in a message to its employees, picked up by Asharq Business on 17 January.
Alshaya, which owns franchise rights in the Middle East for renowned brands like Starbucks, H&M, Mothercare, American Eagle, Debenhams, and Victoria’s Secret also highlighted which retails are affected by the downsizing.
Debenhams is set to completely shut down in Egypt entirely, both in terms of physical store closures and e-commerce, by the end of February 2024.
Asharq Business also cited an anonymous senior official from one of the company’s brands in Egypt, who revealed The Body Shop, Mothercare, and Bank Bazaar will also shut down all operations.
Partial closures are also expected for H&M, Victoria’s Secret, American Eagle, and Bath & Body Works.
“We know that the group is working to minimise its losses in Egypt, but we are currently negotiating with them to persuade them to reconsider the decision,” another anonymous official was quoted saying.
Egypt has been grappling with a severe economic crisis since the start of 2022, exacerbated by geopolitical tensions in Russia, Ukraine, and neighbouring countries. The country is persistently struggling with foreign currency shortage due to a decline in remittances, tourism revenues, Suez Canal income, and exports.
The official exchange rate stands at EGP 30.9 per USD – nearly half the black market rate, which currently sells at EGP 58 per USD.
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