Following declining financial results and an intense family dispute that reached a peak with the firing of his former son-in-law Adi Cohen, Tiv Taam (TASE: TTAM) controlling shareholder, and now its CEO, Haggai Shalom is planning streamlining and managerial and business changes in the chain.
Sources inform "Globes" that Shalom, who hopes to restore growth to the company, is considering an 8% reduction in commercial space, from 50,000 square meters to 46,000 ,in the chain's large supermarkets in the coming six months in order to reduce its rent without affecting sales, while expanding its inner-city branches.
Most of the space reduction will be achieved by reducing space in Tiv Taam's large branches, in addition to closing down branches of the Eden Teva chain and absorbing them into Tiv Taam's existing branches.
As of the end of 2017, Tiv Taam had 45 branches, compared with 47 at the end of 2016 and 45 at the end of 2015.
Expansion of Tiv Taam's branches in cities will include new branches on Yigal Allon Street in Tel Aviv and Huzot Hamifratz in Haifa. The chain is also looking for more inner-city locations. Tiv Taam's deployment strategy is also changing direction. The chain, which as far as is known operated up until now without a map of preferred locations, is now searching for strategic locations.
One of the measures that had a negative impact on the chain's results in recent years was its unsuccessful acquisition of Eden Teva Market (later Eden Teva). This activity was acquired for NIS 30 million, plus NIS 10 million more for inventory. Besides the investment in relaunching the brand, Tiv Taam's investment in the chain amounted to NIS 100 million, costing Tiv Taam losses in previous years. Most of the damage, however, is probably over and done with.
Estimates are that cutting rental costs and related costs, such as electricity and municipal property taxes, could save the chain NIS 4 million annually. Streamlining measures will also extend to Tiv Taam's headquarters and that of Israco International Food Brands Marketing, Tiv Taam's subsidiary. As of the end of 2017, in addition to its 1,257 employees in its branches, Tiv Taam had 106 headquarters workers, 25 of whom, almost one quarter, will be laid off under the streamlining plan.
Sources also inform "Globes" that in addition to these measures, Tiv Taam is also seeking to improve its results within Israco. The company is considering moving its fish activity, commonly believed to be unprofitable, to the north.
Tiv Taam's share has been underperforming in comparison with the competition for quite some time, especially in the past three years, when the share price fell by over 20%, while Shufersal Ltd.'s (TASE:SAE) share price surged 130%, Victory Supermarket Chain Ltd.'s (TASE:VCTR) share price climbed 75%, and Rami Levy Chain Stores Hashikma Marketing 2006 Ltd.'s price (TASE:RMLI) gained nearly 30%.
Published by Globes, Israel business news - en.globes.co.il - on February 4, 2019
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