Omar Effendi has had it's ups and downs, its highs and lows and in a country where

history is rich, it has stood the test of time, resurrecting itself time and time again, becoming a beacon, symbol and icon of modern Egypt. Founded in 1856, Omar Effendi was first christened Orosdi Bak, over the past century Omar Effendi has molded itself to match the needs of the Egyptian public, becoming more then icon in the country, becoming the primary brand for inexpensive quality goods. The first flagship store, which still stands today, on AbdelAziz Street, was originally built to cater to well-heeled foreign and Egyptian customers. Since then the company has gone through various transformations opening up over 60 branches throughout the start of the 1900's. Adolf Orosdi was a Hungarian army officer, who had found refuge in the Ottoman Empire, opened a first clothing store in Galata in 1855. With the Back family, of AustrianHungarian descent, Orosdi and his sons began establishing similar stores elsewhere, including Baghdad, Istanbul and Beirut. Some older Egyptians may still remember Orosdi-Back, that famous turn-of-the-century department store which early on added the Turkish-derived "Omar Effendi" to its name. The sixstory rococo department store designed in 1905-6 by Raoul Brandon (1878-1941) stands at the corner of Abdelaziz and Rushdi Pasha Streets, a powerful architectural testimonial to Cairo till today. Orsodi Bak became Omar Effendi in 1920 when it was sold to new owners, it was then nationalized in 1957, with over 69 branches up and running and one of the first brand to exist in Egypt and the Middle East. This was the first major retail entity to exist in the region. Since nationalization the department store has weathered major changes, fluctuating between an iconic and deteriorated status. Throughout the 20th century, the sixty-some stores became centers for inexpensive goods with quality. The stores lost some of their luster; lacking in the infrastructure that was pivotal in competing with other huge stores propping up in a modern

market. Until the brand was privatized in 2007, where a major overhaul of all aspects of the store took place. Omar Effendi new identity Omar Effendi has been privatized by a group of Saudi investor in the beginning of this year, 2007. Since February 8th 2007 a new Egyptian management has been appointed with a new strategy to upgrade the whole department store inside out. The new makeover will include an obvious changes in image, brand selection for personal and households, management and operation facilities. The store will also be providing a variety of goods from budget to expensive goods, becoming a flagship store for goods catering to each class, gender and race. The 69 stores are all pivotal in the new success of the brand, but 5-10 Flagship stores have been selected, according to region to cater to a higher class client, with international brands and a bigger selection of consumer goods, while the rest will continue to provide quality goods at inexpensive prices. One of the first things the company did was organize it's infrastructure, the new team then focused on creating a brand and image for the company that would rival some of the biggest international department stores. The new logo was designed by Design Bridge, an international branding agency who match the creative, passionate and independent image that Omar Effendi had decided to adopt. The company has over 20 years of experience, a staff of over 160 people, working within an international framework with over 24 nationalities employed in their 3 offices that cater to over 40 countries. They are responsible for branding and logos of retail and consumer giants such as Marks & Spencer, Lipton, KFC, Nescafe and the Champions league. The company chose colors wisely with attention to detail that would revamp and renovate the image of the brand in the minds of the people. The color blue was chosen to symbolize the Nile and the Red and Mediterranean Seas, so perfectly correlated to the desert that exists in the country. The color is a major representation of Egypt, pride in Egypt and the new prosperity that Omar Effendi was aiming for. The color is also relaxing, it

represents depth, stability and growth. Blue symbolizes trust, loyalty, wisdom, confidence, intelligence, faith, truth, and heaven. OE stores will all have the same concept elements in display, organization and running of the store. The same, look and feel will be incorporated in all of the senses, from the apple incense to the smooth oriental grooves playing in the background to make for the most pleasant of shopping experiences. OE departments and new services The department stores will all be separated as follows:y y y y y y y y y y y y y y y

Women wear & lingerie Women accessories Menswear Kids wear Footwear Perfumes, make up & cosmetics Linen Home accessories Heavy households Electronics & small appliances Furniture Sports goods Carpets Luggage Furniture

As well as a vast retail empire, Omar Effendi will be joining forces with a variety of well known brands and retailers in Egypt. Companies that represent the solid, trustworthy and quality atmosphere the new Omar Effendi is synonymous with. In certain outlets you can find Metro supermarket in the Makram Ebeid branch, the Pottery caf in the Hegaz branch, Audi bank, I2 for mobile phones and cellular technology and C&Co optics in the Orabi, Sawalhi, Hegaz and Roxy branches. There will also be a variety of international fashion brands including, Lolita shoes, in Orabi, Sawalhi, and Roxy branches, Skechers shoes and accessories from Glitter in the Orabi, Sawalhi, Hegaz and Roxy branches. Shoe room and 24/7 in the Orabi, Sawalhi, Hegaz and

Roxy branches, Revlon wigs and Miss Claire lingerie in Orabi, Sawalhi, Hegaz and Roxy. There will also be a variety of furniture brands including, Mazloum home, Istikbal and Muse Home Accessories.

Omar Effendi promises a quality shopping experience where you can buy the latest in cosmetics, everything you need for dinner, a brand new outfit for a night out and a new lazy boy for your living room, all wrapped up in a delicious, inviting and tantalizing package, making for a quality shopping experience. Combining the latest in fashion, sophistication and style in a unique environment, is just what the doctor ordered, and Omar Effendi is a very fabulous remedy.

Privatization:

It was a deal that got off on the wrong foot from the very start. For years, Omar Effendi had been lined up for privatization and when a buyer came along, there was a huge debate on the appropriate sale value. It was sold to the Anwal Group for LE589.5 million (slightly less than $100 million at today's exchange rate). And that debate did not die out with the sale especially since the company did not do particularly well. Although immediately post the sale the store was rebranded, modernised and well stocked, that did not last for long. Last year, many of the stores stood with empty shelves and some were closed altogether, hoards of employees opted for early pension and those who stayed complained that they were not receiving their dues. Even an attempt at resale failed due to unsatisfactory diligence towards the company interested in making the purchase.

This week a court ruling annulling the contract with the Anwal Group put to rest the qualms of everyone against the sale in the first place. The court ruled that the contract was not valid. The Anwal group had taken a 90 per cent stake in Omar Effendi with 10 per cent being retained by the government. Sherif Sabry, current head of Omar Effendi's financial and administrative department told the Weekly that he would not comment on the ruling until its actual terms are out, but he said that initially it seems that the ruling is against the contract itself, not against the investor. In that case, Sabry said, it is by no fault of the investor that that happened. "There was a transparent process which the company went through to buy the store with the knowledge and in the presence of all government authorities and the Central Auditing Agency," said Sabry. He added that coming five years later complicates the situation and means that both parties have a lot to lose. Hamdi El-Fakharani, the engineer who had filed the lawsuit, has been quoted as saying that he will take to court everyone involved in the sale, starting with former prime minister Ahmed Nazif and former minister of investment Mahmoud Mohieldin, to every member of the evaluation and sales-related committees. El-Fakharani has taken upon himself to file lawsuits against what he claims are corrupt deals. He previously filed and obtained court rulings regarding Madinaty, the housing development by Talaat Mustafa Group and the Katameya Project of Palm Hills. Ezzat Mahmoud, member of the sale follow-up committee in the holding company for construction and former head of Omar Effendi during the time between the signing of the contract and the actual handover of the company to the buyer, thinks the court ruling has long been awaited. He said even if Anwal appeals the verdict that does not stop the execution of the ruling. "The company has fallen apart. Rent is not being paid for 58 rented branches which threatens their loss. The employees have not been receiving their salaries and many branches have been closed down," Mahmoud said, adding that the ruling obliges the investor to return Omar Effendi as he first received it. "He was supposed to pump in new money and investments. Instead, he pawned some of the branches. Now, not only is it a loss-making company, but it is also indebted to banks," he said. However, Sabry argues that pawning branches is an acknowledged means of finance, and that like many businesses following the global crisis in 2008, Omar Effendi faced problems too. He also refuted accusations that workers who applied for early retirement did not get

their dues saying "not a single employee who was misled into filing a lawsuit won a case against the company." Sabry questioned what the government would benefit out of retrieving Omar Effendi, since "if the government was able to turn its performance around, it might as well have done something with the chains which are still in its ownership such as Sednawi." He added that at least when it is in private hands, it is the investor who bears the losses and the government does not have to shoulder the bill. He said the company could revert to arbitration to insure its rights particularly since the initial ruling says that it has to return the company in its original status. "If the company had to return the store in return for its money, it would have been less complicated." Sabry does not yet know if this situation can be settled amicably as with the Al-Walid's Toshka land. "In that case, there was no lawsuit and court ruling in the first place," he said. Mahmoud, though, does not believe that Omar Effendi is a lost cause. He believes it could be turned around into a first rate commercial centre seeing the potential it has in terms of the number of branches across the country. The store has a total of 82 branches nationwide. It needs financial backing, marketing and employees. While the company had 5,000 employees at the time of sale, today, he says, they are around 2,800. The store is considered a national icon. It dates back to 1856 when it was called Orosdi Back. It changed hands and acquired its current name in the 1920s. It was nationalized in 1957.

Omar Effendi bows to the times Omar Effendi, the Egyptian retail giant that dominated the market in the 1960s and 1970s, is renting its floors to other retailers and hypermarkets. Visitors to Omar Effendi's branch located in Makram Ebeid Street in Nasr City found that about 700 meters of the ground floor, out of a total store space of 6,000 meters, have been rented to Metro supermarket. Further steps to rent space in all Omar Effendi branches nationwide will follow. Hossam El-Mestikawi, Omar Effendi's deputy managing director, said that among the companies that are in the process of renting floors are

Carrefour, Metro and Kheir Zaman. He emphasised that only spaces or floors will be rented, not whole branches. El-Mestikawi added that negotiations are being conducted with other companies, restaurants and cafs. "Carrefour and other companies will only sell products that are not sold in Omar Effendi. This strategy aims at providing a comprehensive and complete service to our customers," ElMestikawi noted. According to Sherif Sabri, head of Omar Effendi's financial and administrative sector, Carrefour is set to rent spaces in most of Omar Effendi branches by the end of the current month. He stressed that the purpose of the new strategy is to strengthen the competitive capacity of Omar Effendi through providing comprehensive services. "We are now negotiating with a number of the biggest retail companies and restaurants. Our target is to provide consumers with convenient mini shopping centres or mini malls nearby their homes, where they can find all they need. We make use of the huge space of the branches, which vary from 4,000 to 100,000 square metres," explained Sabri. He added that the renting strategy is part of the company's three-year development plan. Asked about the fact that Omar Effendi has lost LE82 million in the past nine months, whereas its total losses last year were estimated at LE54.9 million, Sabri replied: "This is normal because of the financial crisis and the expenses of renovating and developing our branches. We renovated almost 70 branches. And we display better quality products." He added: "Because Omar Effendi's branches have greatly developed, we could successfully negotiate the rental of space. We are looking forward to making profit by June 2011." Ever since it was announced that Omar Effendi had been sold in February 2006 to a Saudi investor for around LE600 million, controversy over the privatisation deal has been ongoing. The renting deal has triggered renewed criticism in the Egyptian media. Sabri stressed that the renting of space inside Omar Effendi's branches is legal, contrary to what has been claimed by some public sector officials. "Even before the privatisation of Omar Effendi there was a supermarket in the Murad Street branch in Giza. And many of the branches, including that of Abdel-Aziz Street, which is an antiquity, were wholly rented."

He further stressed that workers in Omar Effendi will not be harmed by the new renting deals: "on the contrary, the companies will hire tens in new labour." Ahmed El-Sayed, head of the Holding Company for Construction, the former legal owner of Omar Effendi, refused to comment on any issue concerning the company. El-Sayed said that he is not authorised to comment because of the pending lawsuit being looked into by the Cairo Centre for Judging (CCJ), which will give its final decision concerning the dispute between the Holding Company for Construction, which owns 10 per cent of Omar Effendi, and Anwal, the Saudi company that owns 90 per cent. Currently, the CCJ, an international arbitration centre specialised in commercial arbitration, is examining a law case filed by Anwal in March 2008 over an "outstanding account" of LE60 million, or 10 per cent of the value of purchasing. "The account is in the National Bank of Egypt," said Sabri. "According to the contract, the account should be released only with the acceptance of both partners. And Anwal has been demanding its right to the outstanding account," said Sabri. Omar Effendi is likely to remain a controversial issue for the coming years. For Egyptians, the company is not just a series of retail departments: it is an icon that should be preserved. The first store was established in 1856 by the name of Orosdi. It stood in the same historic six-floor building on Abdel-Aziz Street in downtown Cairo where the Omar Effendi branch remains today. Orosdi was a Hungarian businessman and established other similar stores in Baghdad, Beirut and Istanbul. In 1900, Orosdi had established almost 60 branches nationwide. In 1920, the branches were sold to a Jewish businessman who changed the name of the stores from Orosdi to Omar Effendi. At the time these were the first retail megastores of their kind in the Middle East. In 1957, Omar Effendi stores were nationalised. What's in store for Omar Effendi? The deadline for bids to buy 100 per cent of the 150-year-old department store group Omar Effendi expired in mid-October with only one bidder expressing interest in the company. The Sultan Centre (TSC), based in Kuwait, offered LE300 million for the group's 82 stores.

TSC, one of the Gulf's leading retailers, generates over $600 million in annual revenues and controls an estimated 15 per cent of the Kuwaiti retail market. The company, which operates 25 stores in three countries - Kuwait, Oman and Jordan -- has region-wide expansion plans. That the bidder should come from the Gulf is hardly surprising. In placing the sale ad in just a handful of Gulf newspapers the government appeared to be targeting Gulf investors who have been eyeing potential investments in the Egyptian market following their retreat from Europe and the US in the wake of 9/11. The Ministry of Investment is currently studying the details of the bid amid rumours that TSC is stipulating major lay-offs among Omar Effendi's workforce. In advertising the sale the government had stipulated that "the buyer must be committed to preserving workers' rights and privileges." Omar Effendi came under the umbrella of the Holding Company for Internal Trade in the early 1990s as a first step towards privatisation. Two subsequent attempts to sell off the store group in 1999 and 2001 foundered over the reluctance of bidders to take on board the stores' payroll of 6,000 workers. In 2000 Omar Effendi attempted to lesson the burden on potential investors by offering early retirement packages to its employees though the number of employees remains almost double international retail staffing levels. During the last two years the company has also renovated several stores in key locations, installing air conditioning and electronic payment systems. According to HC Securities, TSC's advisor on the offer, TSC plans a major restructuring of the company involving all Omar Effendi stores. New retail management systems are planned, and staff will benefit from an ongoing training programme designed to improve skills. Omar Effendi, Egypt's largest state owned department store chain, was founded in 1856 by two Jews and initially traded under the name Orosdi Back. The first flagship store, which still exists, was located on AbdelAziz Street, and targeted well-heeled foreign and Egyptian customers. New outlets opened in the early years of the 20th century as the shop faced growing competition from other department stores such as Benzione, Cicurel and Dawood Ades which were expanding their activities in Cairo and Alexandria. Sold by the original owners in the 1920s Orosdi Back underwent a change of name and became Omar

Effendi, under which name it weathered the 1952 Revolution only to be nationalised in 1957. The company grew under state ownership from only 20 stores in 1961 to the current 82 stores nationwide, though it suffered from top heavy, bureaucratic management. Beginning in the 1970s Omar Effendi faced growing competition in the retail sector as private stores and later shopping malls opened offering more attractive displays, a wider range of products and better service. Over the past two decades Omar Effendi's customer base has been steadily eroded as wealthier customers stayed away, opting instead for privately owned shops. The company's financial performance slumped and the store group was left floundering with a massive workforce of unskilled labour. In today's increasingly crowded retail sector a great many eyes will be watching the progress of the sale of Omar Effendi. Its success, or otherwise, is likely to determine the fate of other state-owned department stores, including Haneaux and Sidnawi.