Alon Blue Square Israel (NYSE: BSI), controled by Shraga Brian, which owns the Mega supermarket chain, published a profit warning today, saying that it would have to write down NIS 500-570 million in its second quarter financial statement because of Mega's huge losses.
According to today's notice to the stock exchange, Mega will record a NIS 55 million loss on ordinary activity in the second quarter, and an additional loss of NIS 577 million arising from a one-time write down for various expenditures, including costs of implementing its recovery plan.
This, however, is not the end: Mega will write down another NIS 360 million for termination of the activity of branches and a write-down of goodwill, so that its second quarter loss will total NIS 632 million.
As a result, Alon Blue Square will be compelled to make a huge provision. It will write down NIS 250-300 million for reduction in goodwill and loss of value of other Mega assets (such as its Diners credit card and the Naaman homeware group). Together with other one-time write-downs, its provision will total NIS 500-570 million.
The company's notice states that his figure could yet change, as it is still examining the extent of the provisions it needs to make. In other words, the final write-down could be even larger.
Published by Globes [online], Israel business news - www.globes-online.com - on August 20, 2015
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