The Carrefour Israel retail chain, set up by Electra Consumer Products (TASE: ECP), continued to incur heavy losses in 2023. Electra Consumer Products estimates, however, that the chain could become profitable in the current quarter. Carrefour posted a loss of NIS 188 million last year, following a loss of NIS 207 million in 2022.
Carrefour is operated by a company called Global Retail, in which Electra Consumer Products has a 48% stake, on which it made a NIS 67 million write down last year. Carrefour’s losses led to Electra Consumer Products posting a net loss attributable to shareholders of NIS 101 million in 2023, which compares with a profit of NIS 102 million in 2022.
Global Retail’s revenue totaled NIS 3 billion last year, 9.2% more than in the previous year, but its gross profit margin fell from 31.7% to 29% because of special opening offers for Mega branches converted to the Carrefour format. Global Retail has so far launched 86 Carrefour branches.
Electra Consumer Products itself posted a 5.3% rise in revenue last year to NIS 6.5 billion, thanks to growth in the food retailing sector. Because of the write-down of Carrefour, it made an operating loss NIS 12.3 million, which compares with an operating profit of NIS 210 million in 2022.
Another retailing venture by Electra Consumer Products, the launch of 7-Eleven convenience stores in Israel last year, resulted in a loss of NIS 68 million. The chain now numbers eight stores in Israel, but the company says that it is carrying out "substantial closures."
Electra Consumer Products signed a franchise agreement for Israel in October 2021, and initially planned to open 30 7-Eleven stores around the country, but in the end it opened only eight, all of them in Tel Aviv. The chain’s CEO, Avinoam Ben Moha, resigned in August last year, apparently because of differences of opinion with Electra Consumer Products senior management.
Electra Consumer Products CEO Zvika Shwimmer said that the company had carried out "several moves that strengthened the group’s financial soundness and that will enable us to continue to present growth in revenue and in operational metrics." He mentioned the investment by French company PFH Group in Carrefour Israel alongside further investment by Electra Consumer Products, which he said "led to the strengthening of Carrefour’s shareholders’ equity by NIS 270 million", and the restructuring of the chain.
"We continue the process of converting branches of the chain and are currently in negotiations on extending leasing agreements for a large part of its assets. The deep streamlining and recovery process at Carrefour, together with the extensive kashrut project in which hundreds of products were approved, and the launch of our customer club, will make a very strong contribution to strengthening the group and to accelerating its growth as the leading consumer products group in Israel, and will enable us to open 2024 operationally and financially robust in all group companies, and to present growth and profitability in the course of the year."
Published by Globes, Israel business news - en.globes.co.il - on March 26, 2024.
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