The hard work of brothers Yossi and Shlomi Amir since they became the controlling shareholders in retail chain Shufersal (TASE: SAE) is starting to show. The largest chain of supermarkets in Israel posted a 153% rise in its net profit for the second quarter, to NIS 169 million. During the quarter, the Amir brothers began a round of cutbacks at management level, and took the reins of the day to day running of the company.
Shufersal’s second quarter revenue rose 8% to almost NIS 4 billion. The gross profit margin rose to 27.8%, from 26.8% in the corresponding quarter of 2023. Operating profit totaled NIS 470 million, representing a 45% year-on-year increase. The increase was partly attributable to gains on revaluation of real estate assets and the sale of non-financial assets amounting to NIS 9 million. Operating profit as a percentage of sales rose to 6%, from 4.4% in the corresponding quarter.
Improved performance
There are several indications, besides the second quarter results, of improved performance at the chain. One of the most important ones is same store sales in the first half of this year, which were 5.5% higher than in the same period last year.
The growth in sales at the stores led to online sales becoming a lower proportion of total sales, declining from 18.2% in the first half of 2023 to 17.5% in the first half of 2024. The proportion of sales of Shufersal’s own brand also declined between the two periods, from 27.5% to 26.2%. This is apparently a result of the Amir brothers’ decision to weaken the chain’s own brand and improve terms of trade with other suppliers.
The Amir brothers completed their takeover of Shufersal in February this year, when they bought a 24.99% stake. Formally, they are not the controlling shareholders, but no-one has a larger holding than them. They bought part of the financial institutions’ holdings in the chain, and, after a dispute with the Israel Securities Authority, decided to take upon themselves all the obligations of controlling shareholders.
The move has already proved profitable for the brothers. They paid NIS 1.5 billion for their shares, which were worth NIS 1.76 billion before this morning’s opening on the Tel Aviv Stock Exchange. Following the release of the second quarter results, Shufersal’s share price is up by more than 9.5% in today’s session. In the context of the acquisition deal, the Amir brothers also paid Paz NIS 100 million to end their non-compete agreement with it, made when they sold the Freshmarket chain that they founded to Paz several years ago.
Published by Globes, Israel business news - en.globes.co.il - on August 20, 2024.
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