L’azurde CEO discusses Saudi strategy, potential acquisitions

Amid a wider economic slowdown in Saudi Arabia and the Middle East, consumer spending is on the decline, affecting the luxury goods sector, says Selim Chediac, CEO of Saudi-based jewelry maker L’azurde. However, the company still sees opportunity to grow its retail network in key markets in the MENA region, and is now eyeing potential mergers and acquisitions, he told Argaam.

Q: Given the drop in oil prices and the consequent squeeze in consumer spending in KSA, what would be your Plan B? Would you be looking to expand to other markets?

A: As part of our strategy, we continuously review our operations, consumer offerings, growth programs and new initiatives to grow the company and make it more efficient, and relevant. For example, we recently introduced, for the first time ever in the Middle East, the 14 karat gold jewelry line in Egypt, which offers more affordable, lighter-weight gold jewelry with the same L’azurde quality, great designs and prestige. The 14K line has been very well received by our customers in Egypt.

There is also significant opportunity for L’azurde to grow its jewelry retail network in our key markets, KSA and Egypt, while simultaneously considering opportunities across the GCC and the wider MENA region. We have an outstanding revamped retail concept offering very attractive products, top customer experience and services. We are busy expanding this network of retail shops in top malls. 

As we drive these various organic growth initiatives, for the first time in our history we will also be looking at potential mergers and acquisitions. 

Q: What has been the biggest challenge after you debuted on Tadawul at a time when investor sentiment and growth in the kingdom are declining?

A: There was strong demand for the L’azurde shares at the IPO thanks to the long record of solid financial performance and trust in the Company, its management team and the brand. We had a great debut on Tadawul as the first luxury retail stock to join the exchange. Since then, the market has been hit by the continued pressure of low oil prices, declining overall consumer demand and restructuring at the government level. We have a strong management team very committed to growing the Company and offering shareholders great value over time. We have many strong growth initiatives in the pipeline, which will need some time to be perfectly executed and raise the company’s revenues and profits.

Q: There seems to be muted demand for gold jewelry across the world, including in KSA. What, if any, are your plans to lure in buyers again? 

A: In the context of the wider economic pressures, customers have become more discerning, but there is still a strong demand for quality gold jewelry and top brands across the Middle East and North Africa. 

Against this backdrop, we took the initiative to become the first jewelry brand to introduce a 14 karat gold jewelry collection, which will offer consumers top quality jewelry at great value and attractive consumer price points. This together with the launch of our new value brand Kenaz and the review of our product range under our flagship brand L’azurde will help us gain back consumer interest and drive engagement into the category.

Weddings have always been a big segment for L’azurde and we have built a reputation as the premier designer of wedding sets and pieces. This in turn has created a sustainable customer base and revenue growth in line with an increasing population and favorable demographic fundamentals. In order to support consumers with lower disposable income, we launched beautiful new diamond jewelry sets for the wedding occasions at very attractive price points in our retail shops this year, which generated very high consumer demand. 

Q: How would you describe the current state of luxury spending in Saudi Arabia, compared to other countries in the Gulf like the UAE for example?

A: We have noticed slowing consumer demand on most categories in KSA and in the region. In such an environment, luxury products can be affected more than other industries. However, there is a sustainable demand for wedding jewelry in KSA thanks to a very young population and a strong affinity for Gold and jewelry in our part of the world. Also, in times of stressed demand, the market leader usually expands its market share and gains at the expense of smaller players. We continue innovating and investing in product development and new lines to support the demand for L’azurde jewelry.

The situation in the UAE is similar but with different drivers, such as tourism. The weaker currency rates in Russia, Europe and the UK have had an impact, but we believe in the long-term demand for luxury goods in the UAE. 

Q: How do you plan to differentiate your brand from competitors in a crowded market?

A: Due to its strong heritage and focus on marketing activities, L’azurde has become one of the most familiar brands operating within our key markets. We invest heavily in our marketing activities to ensure that the L’azurde brand is top-of-mind with consumers. Celebrity endorsements, such as our partnership with Elissa and Lady Fozaza, are very effective and have helped to uplift and distinguish the brand’s image.