Shufersal reports weak Q3 results

Shufersal Photo: Eyal Izhar

Consolidation of recently acquired pharmacy chain New Pharm's activities has weighed on the Israeli supermarket chain.

In its third quarter financial results, Israeli supermarket chain Shufersal Ltd. (TASE:SAE) has reported an increase in revenue, but stagnation in profit, with recently acquired pharmacy chain New Pharm weighing on the company.

Revenue totaled NIS 3.3 billion in the third quarter, 9.4% more than in the third quarter of 2017. Gross profit rose by NIS 99 million to NIS 877 million, 26.5% of sales, compared with 25.8% of sales in the third quarter last year.

Management and general expenses grew from NIS 664 million in the third quarter of 2017 to NIS 763 million in the third quarter of this year. Factors in the increase included consolidation of New Pharm's activity, costs of launching the ICC-CAL credit card, and higher salary expenses, including an increase in the minimum wage, the latest installment of which was in December 2017. Discount Brokerage predicts that cumulative wage hikes at Shufersal will reach a cumulative NIS 250 million by the end of 2018.

Shufersal's operating profit in the retail sector totaled NIS 95 million, 3% of revenue, compared with NIS 82 million, 2.7% of sales, in the corresponding quarter last year. Operating profit in real estate fell from NIS 37 million in the third quarter of 2017 to NIS 35 million in the third quarter of this year. Operating profit in the customer credit card club was only NIS 2 million, compared with NIS 12 million in the corresponding quarter last year.

Shufersal reported that its operating loss in the New Pharm sector reached NIS 10 million in the third quarter. Shufersal's EBITDA was NIS 202 million, 6.1% of revenue, compared with NIS 194 million, 6.4% of revenue, in the third quarter of last year.

Net profit amounted to NIS 64 million in the third quarter, compared with NIS 63 million in the third quarter of 2017. 2018 is a transition year for Shufersal, with changes in its activities: the first year of activity with New Pharm and the credit agreement with ICC-Cal.

Commenting on the company's results, Shufersal chairperson Mauricio Wior and CEO Itzhak Aberkohen said today, "We are glad to present today Shufersal's good results for the third quarter and the first nine months of the year. Revenue reached a record NIS 3.3 billion in the last quarter, thanks to diverse retail activity, including consolidation of New Pharm's activity. Retail activity at Shufersal's branches shows power and persistent success, and is an anchor for the group's continued business investments.

"We continued development of our innovation non-stop in order to offer our customers the best goods and services. We continued to develop our private brand. We entered the cosmetics and personal care sector for the first time and expanded our variety of products. In the first nine months of the year, the private brand's share of total company sales rose to 23.6%. Another improvement was in the online sector, in which we continued to grow, with online sales accounting for 13.3% of Shufersal's total sales, an extraordinary achievement on a global scale. These excellent business results are attributable to the dedication of Shufersal's staff and loyalty to our customers, for whom we continue to grow and improve."

Published by Globes, Israel business news - en.globes.co.il - on November 25, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Shufersal Photo: Eyal Izhar
Shufersal Photo: Eyal Izhar
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