The hard work of brothers Yossi and Shlomi Amir since becoming controlling shareholders in the Shufersal (TASE: SAE) retail chain is starting to show results. Israel’s largest supermarket chain posted a 153% jump in net profit in the second quarter, to NIS 169 million. During the quarter, the Amir brothers began a round of management cuts, taking over the day-to-day running of the company.
Shufersal’s revenues in the second quarter increased by 8% to nearly NIS 4 billion. Gross profit margin increased to 27.8%, from 26.8% in the corresponding quarter of 2023. Total operating profit was NIS 470 million, an increase of 45% year-on-year. The increase was due in part to gains from the revaluation of real estate assets and the sale of non-financial assets, which amounted to NIS 9 million. Operating profit as a percentage of sales increased to 6%, from 4.4% in the corresponding quarter.
Improve performance
There are several indicators, besides the second-quarter results, of the chain’s improving performance. The most important of these is same-store sales in the first half of this year, which were 5.5% higher than the same period last year.
The growth in store sales led to a decline in the share of online sales in total sales, which fell from 18.2% in H1 2023 to 17.5% in H1 2024. Shufersal’s own-brand sales share also fell between the two periods, from 27.5% to 26.2%. This appears to be a result of the Amir brothers’ decision to weaken the chain’s own brand and improve trading terms with other suppliers.
The Amir brothers completed the Shufersal acquisition in February of this year, when they bought a 24.99% stake. Officially, they are not the controlling shareholders, but no one has a larger stake than them. They bought some of the financial institutions’ stakes in the chain, and after a dispute with the Israel Securities Authority, they decided to assume all the liabilities of the controlling shareholders.
The move has already proven to be a lucrative one for the brothers, who paid NIS 1.5 billion for their shares, which were valued at NIS 1.76 billion before the Tel Aviv Stock Exchange opened this morning. Shufersal’s share price rose more than 9.5% in today’s session after the release of the second-quarter results. As part of the acquisition, the Amir brothers also paid Paz NIS 100 million to end a non-compete agreement with it, which was entered into when they sold the Freshmarket chain they founded to Paz several years ago.
This article was published in Globes, Israeli Business News – en.globes.co.il – on August 20, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.
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