Anyone seeking further confirmation of the sharp contraction in the Israeli economy will see it in the financial report for the first quarter of 2009 published today by IDB Holding Corp. Ltd. (TASE:IDBH) unit Shufersal Ltd. (TASE:SAE;Pink Sheets:SSLTF). Israel's largest supermarket chain reported lower gross and operating profits as intensifying competition took its toll.
Shufersal posted NIS 2.63 billion revenue for the first quarter, just 1.7% more than the NIS 2.85 billion for the corresponding quarter of 2008. It should be noted that Passover fell in early April this year, which affected prices as retailers held preholiday discounts, even as sales increased by volume. Same-store sales fell by 1.4% compared with the corresponding quarter.
Commenting on how Shufersal is coping with the economic crisis, CEO Effie Rosenhause said, "We're undergoing an economic crisis, which, under our work plan, should have affected us in the form of lower sales. This is also a very competitive market, and competition intensifies from quarter to quarter."
Shufersal posted an operating profit before other revenue and expenses of NIS 107 million for the first quarter, compared with NIS 131 million for the corresponding quarter. The operating profit margin narrowed to 4.1% for the first quarter from 5.1% for the corresponding quarter.
Rosenhause noted, "The drop in gross profit was partly due to a non-dramatic move by customers to the hard-discount format. The drop in the gross profit also affected the operating profit."
Shufersal posted a net profit of NIS 86 million for the first quarter, 19.4% more than the NIS 72 million net profit for the corresponding quarter. The increase in net profit, compared with the fall in operating profit, was due to a smaller tax expense of NIS 30 million for the first quarter and net financing income of NIS 8 million.
Shufersal's share rose 0.2% to NIS 13.15.
Published by Globes [online], Israel business news - www.globes-online.com - on May 14, 2009
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