After the Fox fashion group successfully launched two of the activities under it last year – Retailers and Terminal X, competitor Castro is also trying to flood value by offering the discounted fashion chain to young people owned by Urbanica.
Castro , Controlled by the Rotter family, is currently traded at a market value of close to NIS 1 billion, after the stock doubled in value last year. According to capital market estimates, Urbanica is also aiming for a similar value.
Last Thursday, Castro reported that its subsidiary, Palo Retail, which operates the Urbanica chain of stores, is promoting an IPO and listing of its shares for trading on the Tel Aviv Stock Exchange. The offering will be led by the underwriting firm of investment house Valio Base.
In this context, Palo Retail submitted to the Securities Authority a first (not public) draft prospectus and an application for a permit to publish a public offering prospectus. However, according to Castro, at this stage there is no certainty regarding the completion of the offering, the receipt of the necessary approvals for its execution and / or regarding the structure of the offering, its timing, scope and conditions (if and to the extent that it is carried out).
Net profit of over NIS 10 million in2020
Palo Retail operates in the field of clothing and fashion accessories under the Urbanica brand, which caters mainly to the younger generation. As of the end of November 2021, the company operated 18 stores in Israel, which are relatively large stores located in malls and shopping centers, with an average area of about 2,000 square meters per store. , Cosmetics as well as accessories and products of home fashion and home design).
Castro has not yet published its financial statements for 2021, but in 2020 the group noted that Palo Retail’s net profit amounted to NIS 10.5 million, compared to a net profit of only NIS 1.6 million in 2019.
Castro further notes that Palo Retail is dependent on a single Canadian supplier called YM, which was responsible for 37% of its total purchases from suppliers in the third quarter of 2021. According to 2020 reports, Canadian supplier YM was responsible for most clothing fashion products and supplied Palo Retail with 44.4. a million shekels.
As of the end of 2020, Palo Retail was listed in Castro’s books at a value of NIS 127 million, so that the completion of the IPO would flood Castro with a large profit. Palo Retail began operations in January 2015, and was acquired by Castro as part of the merger deal with the Hoodies chain in 2018.