French supermarket chain Carrefour, which arrived in Israel through Electra Consumer Products (TASE: ECP), is starting to generate profits for the Israeli company. After many and long tribulations, Carrefour Israel posted an operating profit of NIS 24 million, about 3% of its turnover, in the second quarter of this year, which compares with a loss of NIS 50 million in the corresponding quarter last year.
Electra Consumer Products, headed by Zvi Schwimmer, is controlled by Elco (TASE: ELCO), itself controlled by brothers Daniel and Michael Salkind. Revenue from Electra Consumer Products’ food retailing segment, which mainly consists of Carrefour, totaled NIS 812 million in the second quarter, up 7.4% year-on-year. Same store sales grew 11%. Sales of branches of the Yeinot Bitan chain that were converted to the Carrefour format were 16% higher in the second quarter of this year than in the corresponding quarter, and in the first half year were 38% higher than in the first half of 2023.
Sales per square meter in all of Electra Consumer Products’ supermarkets were NIS 26,900 in the second quarter. In branches converted to the Carrefour format, sales per square meter were NIS 36,100 in the quarter.
Gross profit in the food retailing segment rose by 30% to NIS 252 million, and from 26% to 31% as a proportion of sales. The company explained the growth in gross profit by the continued conversion of supermarket branches to the Carrefour format, and by growth in proceeds from converted stores, alongside reduced expenses as a result of streamlining measures.
So far this year, Electra Consumer Products has opened 25 Carrefour branches, and it continues to convert more supermarket branches to the format. Altogether, there are currently 102 supermarkets under the French brand name in Israel.
Electra Consumer Products’ share price has risen 8.5% so far this year, giving the company a market cap of nearly NIS 2 billion at today’s opening. In today’s trading, the share price is currently down 4.24%.
Besides food retailing, the company has two electrical goods chains, Mahsaney Hashmal and Shekem Electric, an air conditioners segment, and a sports and leisure goods segment, in which it sells the Adidas and Columbia brands. Its total second quarter revenue rose 17% to NIS 1.77 billion; operating profit rose sharply from NIS 1.7 million in the second quarter last year to NIS 63 million in the current quarter; and net profit was a miserly NIS 106,000 in the current quarter, which compares with a loss of NIS 21.4 million in the corresponding quarter, these figures mainly stemming from the high cost of converting supermarket branches to the Carrefour format.
One episode that the company will be happy to have put behind it is its attempt to bring the 7-Eleven convenience store chain to Israel. Electra Consumer Products closed the business in May this year, after accumulating losses of NIS 70 million on the venture. The chain in Israel was sold for NIS 3 million and converted to a local brand called Seven Express. Electra Consumer Products will retain the 7-Eleven franchise for Israel for three years, and, subject to the agreement of 7-Eleven, Inc., it can start to operate it again, or sell the franchise agreement.
Published by Globes, Israel business news - en.globes.co.il - on August 28, 2024.
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