group Fox which is controlled by Harel Wiesel, reports that it is in negotiations with Hot Mobile to transfer the company’s share (49%) in the partnership of the two in the network of cellular and communication devices red.
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The partnership was established about a year and a half ago, and as part of it Hot owns 51% of the chain’s stores. As part of the expansion of its retail operations, red is expected to be fully owned.
In the report, Fox stated that the transfer of the activity is not expected to significantly affect the company’s results, and in its estimation the transfer will be completed no later than the second quarter of 2023.
The red chain markets cellular devices, tablets, headphones, multimedia products, gaming and related accessories from Apple, Samsung, Xiaomi and other international manufacturers, as well as a private brand that offers cellular and communication packages. With the launch in March 2021, Fox and Hot estimated that within three years 30 branches will be opened, and the annual revenues will amount to hundreds of millions of shekels. In addition, there is talk of expanding abroad.
In practice, the chain did not achieve the goals, and about six months ago they began to downsize the stores, which were opened with the concept of stores measuring about 200 square meters, such as the first store that opened in October 2021 in Azrieli Mall in Tel Aviv, and additional stores in Ice Mall in Eilat and the Gold Mall in Rishon Lezion. Today The chain has only 5 branches.
“Activities that collided”
According to a senior official in the industry, “the activity was loss-making for Fox. At the beginning of the partnership, they opened very large stores in relation to the demand in the area, the store in Azrieli was a failure, and another 600 square meter store in Eilat’s Eismall didn’t work either. For the sake of illustration, when they opened a stand in front of the store, they paid more there than in the store itself. Hot also operates its own cellular activity, and the two activities collided with each other.”
The official adds that “Harel Wiesel made a clear appeal and made it clear that he is not interested in continuing the activity anymore. Wiesel has many partners, but in this case there was no connection between the professionals at Hoot and the professionals at Fox, and it failed to take off.”
Hot Mobile operates dozens of stores, service centers and laboratories throughout the country, and red was actually one of its competitors. However, sticking to the power of the Fox Group in malls and shopping centers, and Wiesel’s retail experience, led to the collaboration.
Bhut now believes that the transfer of ownership has a high potential for success, and plans to open more red branches in the future. “This is a significant milestone for our company, and I am sure that it will bring new opportunities for growth and development,” wrote Tal Garnot-Goldstein, CEO of the Hot Group, in a letter sent to employees. “In the near future, red’s stores will be added to our Hot Mobile operations, and we expect make further upgrades”.