L’azurde Company for Jewelry (4011.SE) reported 4Q18 results with earnings falling 95% Y-o-Y to SAR0.1mn on weaker margins. FY18 earnings declined 44% Y-o-Y to SAR17.7mn due to higher expenses, some of which related to the Tous acquisition, which included several one-off costs of due diligence and restructuring of the work force and associated training to meet the Saudization/Feminization requirements. Excluding these one-off costs, net profit for the year declined 27% Y-o-Y to SAR23.1mn. Revenue for the quarter grew 9% Y-o-Y, while FY18 revenue increased 14% to SAR406.5mn, as Egypt continued to perform strongly (wholesale +35% , retail +154%) due to an advertising campaign and recovery in purchasing power as well as new shop openings. Saudi wholesale revenue declined 11% Y-o-Y in 2018 on the introduction of VAT, while retail revenue increased 2% Y-o-Y on the consolidating of two months of revenues of the recently acquired franchise business of Tous. Meanwhile, gross margin contracted c1pp to 60.1% during 2018 with gross profit up 12% Y-o-Y to SAR244.1mn, while operating margin narrowed a steeper 4pp to 17.2% with EBIT -7% Y-o-Y as SG&A expenses grew 23% Y-o-Y.