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Damas: Back in black
But not for a funeral. The embattled jewelry co is fighting back, and has just announced a (small) profit. So survival looks likely, although there’s a long way to go yet.
December 1, 2010 2:22 by Samuel Potter
For Damas, some good news at last. The company has been through the mill over the past year or two, but it can finally see light at the end of the tunnel: It has reported a profit, for the six months ending in September, of around $1.1 milliion.
Now that’s not much, especially when you’re the largest gold and jewelry retailer in the whole Middle East. But Kipp is betting the company will gladly take it over the heavy losses and management skirmishes that have marked its most recent chapter.
“I think this is the first sign of recovery that Damas is showing now, in spite of a very difficult year in the market globally,” said Anan Fakhreddin, Damas Chief Exec. “We’ve turned around from net losses into a profitable position this year.”
Fakhreddin can bemoan the “difficult year in the market globally” all he wants, but the truth is Damas would have had a nightmare year regardless. In October of 2009, former Chief Exec Tawhid Abdullah had to step down from his post when it was discovered that he and his brothers had borrowed company funds for a series of purchases “ranging from fuel to real estate and stocks,” reports Gulf News.
The Abdullah brothers, who founded the firm, owed it $167 million in cash and gold. The company was ordered to dismiss its board and pay hefty penalties for irregularities, and in March the brothers (Tawhid, Tamjid, and Tawfiq) were banned from acting as directors for any company in DIFC for 10 years. That didn’t stop them returning to work in June as “senior advisors,” however. Hard to believe, we know.
The scandal at the publicly traded company, coupled with the economic slowdown and a number of major existing debts, led to heavy losses in the following months.
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