Nice One bets on stores and private labels as profits turn negative

There is a pattern in Nice One's numbers that was visible well before this latest set of results, and the swing into loss in the first half of 2026 is less a surprise than the logical next step in a slide the company has been signaling for a year. Nice One Beauty E-Marketing, the Saudi online beauty and cosmetics retailer listed on the Tadawul under the ticker 4193, has turned to a net loss of 11.28 million riyals for the six months to the end of June, a sharp reversal from the net profit of 22.84 million riyals it posted in the same period a year earlier. Revenue fell 6.4 percent to 484.22 million riyals from 517.31 million, and the operating line went the same way, swinging to an operating loss of 7.05 million riyals against an operating profit of 26.75 million a year ago. Earnings per share flipped from a profit of 0.20 riyals to a loss of 0.10 riyals. The proximate cause of the revenue decline is written plainly in the customer numbers, and it is a demand problem at the top of the funnel. Customer visits fell 11.5 percent over the half, to 63.30 million from 71.54 million, and fewer visits mean fewer orders. The company is candid that this is being driven by intensifying competition rather than any collapse in its own appeal, and it points to its retail store expansion as a partial offset, with physical stores lifting their contribution to total revenue to 3.7 percent in the half from a negligible 0.29 percent a year earlier. The second quarter is where the strain shows most clearly. Revenue there slipped 2.1 percent year on year to 188.26 million riyals as visits dropped a steeper 15.6 percent, and the quarterly net loss widened dramatically to 19.93 million riyals from just 1.29 million a year earlier. That quarterly figure is the one that dragged the whole half into the red, because the first quarter had actually been profitable at 8.65 million riyals, buoyed by Ramadan falling entirely within it. The most revealing part of the story is that this is not a margin problem at the product level, which makes the losses a matter of cost structure rather than a broken business. Gross profit did fall, down 5.33 percent to 121.92 million riyals, but that decline simply tracked lower sales, and the gross margin as a percentage of revenue actually improved, supported by better pricing, higher purchasing efficiency and a growing contribution from private-label brands. In other words, Nice One is buying and selling its products more efficiently than before. The losses are coming from everything layered on top. Selling and marketing expenses jumped 26.11 percent to 96.16 million riyals as the company spent heavily to defend market share and push its private-label push, lifting the marketing-to-revenue ratio to 19.86 percent from 14.74 percent. General and administrative expenses rose 27.24 percent to 32.80 million riyals, weighed down by the indirect costs of running an expanding store network, pushing that ratio to 6.77 percent from 4.98 percent. On top of that, the company raised its inventory provision sharply to 12 million riyals for the half from 2.7 million a year earlier, which ate into the benefit of those improved margins. Stack rising marketing, rising admin costs and a bigger inventory write-down on top of falling revenue, and a healthy gross margin is simply not enough to keep the bottom line in profit. The regional and competitive context is where this becomes more than one company's rough half. Nice One sits in one of the most fiercely contested corners of Gulf e-commerce, online beauty and cosmetics, competing against regional marketplaces like Noon and Amazon, specialist beauty retailers, and the direct-to-consumer arms of the brands themselves, all fighting for the same shoppers across Saudi Arabia and the wider region. That intensity is precisely what is forcing the heavy marketing spend and driving down the visit numbers, creating a difficult bind where the company must burn cash on customer acquisition simply to hold its ground, which erodes the profitability investors want to see. The strategic response Nice One has chosen is defensible and clearly stated. It is deliberately investing through the downturn, expanding its retail store network to build an omnichannel presence, growing private-label brands that carry better margins and differentiate it from marketplaces reselling the same products, and squeezing purchasing efficiency, all framed as pillars of long-term growth rather than short-term profit. The improving gross margin and the rising private-label contribution are genuine evidence that parts of that strategy are working. But the honest reading is that Nice One has chosen to spend its profitability down on expansion and defense at exactly the moment competition intensified and traffic softened, a combination that has now tipped it into a first-half loss with a notably worse second quarter. The bet is that the stores, the private labels and the scale eventually convert into durable, hi