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FinancialNews
01-05-23
Saudi Electronics Retailer eXtra Halts Expansion Plans in Egypt Due to Economic Uncertainty
(MENAFN) United Electronics Co., popularly known as eXtra, has recently announced its decision to halt its expansion plans in Egypt, as per a recent report by Reuters. The company cited the results of a feasibility study as the reason for this decision. According to a statement released by the company, the expected negative financial impact of this decision is estimated to be around SR38 million (USD10.13 million).
The statement further added that after reviewing the feasibility of continuing with external expansion in the Arab Republic of Egypt, the Board of Directors of United Electronics Co. has decided to discontinue the company's plans to expand in Egypt. This decision comes as a significant setback for the Saudi consumer electronics company, which had announced its plans to establish its first subsidiary outside the Gulf Cooperation Council in Egypt earlier this year, with an initial investment of 1 billion Egyptian pounds (USD32.41 million), which was worth $63.6 million at the time.
The decision to halt the expansion in Egypt is likely due to the current economic situation in the country. Egypt's economy has been struggling for some time now, and the situation has been further worsened by Russia's invasion of Ukraine. This event has led to a significant dip in tourism, raised commodity prices, and prompted foreign investors to withdraw about USD20 billion from the country's financial markets. This may have made it difficult for eXtra to continue with its expansion plans in the country.
Overall, eXtra's decision to discontinue its expansion plans in Egypt highlights the challenges that companies face when expanding into new markets, particularly in countries with unstable economic conditions.
MENAFN01052023000045014146ID1106147629
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