The Rami Levy Sycamore Marketing chain of food stores today (Monday) published its results for the third quarter and the first nine months of the year. While the results for the broad period indicate growth in the volume of activity and an increase in operating profitability, in the third quarter alone there was a slight decrease in some of the indices.
The chain’s revenues in the third quarter decreased by 2.4% and amounted to NIS 1.62 billion, compared with NIS 1.66 billion in the corresponding quarter last year. The reports explain that the decrease was mainly due to a 7% decrease in the revenue of identical stores, due to a shortage of working days in September due to the timing of the Tishrei holidays. The chain also noted that the corresponding quarter last year was positively affected by increased consumption due to the corona crisis.
Revenues in the “others” segment (Kopix, Good Pharm and Rami Levy Communications) rose to NIS 160 million in the last quarter, compared with NIS 140 million last year.
Net profit amounted to NIS 42 million in the quarter, a decrease of 12% compared to a profit of NIS 48 million in the corresponding quarter last year. Here, too, the decline is attributed to a decrease in revenue as a result of the shortage of working days and the deepening of holiday promotions.
Levy noted with the publication of the reports that “also in the last quarter we deepened promotions during the Tishrei holidays, which was reflected in a decrease in the gross profit of the parent company’s writers’ activity, in that we transferred part of the profit to the customer.”
Stock Rami Levi , Which until the date of publication of the reports was trading at an increase of about 1.5%, ended the day with a fall of 4.3% following the results. The share is traded at a market value of NIS 3.3 billion, when from the beginning of the year it added about 19% to its value. Levy’s holdings (about 40%, together with his delicate wife) are worth about NIS 1.32 billion.
The rate of profitability has risen
Gross profit in the third quarter of the year amounted to NIS 370 million, a slight decrease compared to NIS 376 million in the corresponding quarter. At the same time, the gross profit margin rose to 22.79%, compared to 22.62% last year. The network notes that the rate of profitability was positively affected by the improvement in trading conditions, logistical efficiencies in the company’s logistics in Modiin, the private label and the profitability of the subsidiaries.
Operating profit for the quarter amounted to NIS 68 million (4.19% of revenues), a decrease of 11% compared to NIS 77 million last year. The profitability rate decreased only slightly, as in the corresponding quarter it stood at 4.63% of revenues.
EBITDA in the quarter amounted to NIS 133 million (approximately 8.2% of revenues), compared with NIS 138 million (approximately 8.3% of revenues) in the corresponding quarter last year.
The publication of the reports comes after the food retail chain published an amended report yesterday regarding the renewal and updating of the terms of the agreement between it and its controlling shareholder, Rami Levy. As part of the update, the increase in the maximum price of the monthly rent per square meter for properties that the chain rents is reduced to 11%, instead of an increase of up to 20% as the company initially sought to approve. More than NIS 190 million.
At the beginning of the month, an affair exploded, centered on suspicion of coordinating prices between the food giants in Israel. Competition Authority investigators raided the offices of Strauss and Shufersal, and questioned a number of senior officials, including Shufersal CEO Itzik Aberkhan. Levy also came to the Competition Authority for investigation.
From January to September the picture changes – and for the better
Looking at Rami Levy’s financial results in the first nine months of the year, an improvement was observed in most of the indices. Revenues between January and September amounted to NIS 4.82 billion, compared with NIS 4.81 billion in the corresponding period last year. The company noted that during the period there was a 3.2% decrease in the revenue of the same stores compared to last year, so there was a very increased consumption, but the decrease was offset by revenues from opening new branches and an increase in subsidiaries – Good Pharm, Kopix and cellular activity.
Gross profit in the first three quarters increased by 4% to NIS 1.12 billion, compared with NIS 1.07 billion in the corresponding period last year. Operating profit jumped by 19% during this period and amounted to NIS 228 million, compared with NIS 192 million in the corresponding period last year. The operating profit rate rose to about 4.72%, compared to 3.99% last year. According to the reports, the improvement is due, among other things, to savings in maintenance expenses as a result of improvements and streamlining of processes within the company, which were partially offset by the increase in employees’ salary expenses.
Bottom line, the growth in revenues and the improvement in profitability led the Rami Levy Sycamore Marketing chain to show a 33% increase in net profit in the first nine months of the year to NIS 150 million, compared to NIS 113 million in the corresponding period last year.
EBITDA in the first nine months increased by approximately 12% to NIS 417 million (approximately 8.6% of revenues), compared with approximately NIS 372 million (approximately 7.7% of revenues) in the corresponding period last year.
The company has a short-term cash and investment fund of about NIS 978 million. On the other hand, the company has a gross financial debt in the amount of only NIS 13 million. The company announced that it is allocating an amount of about half a billion shekels from the cash fund for strategic investment that will lead to an increase in the average shopping basket of the company’s customers in the company’s branches.
Simultaneously with the approval of the reports, the company announced a dividend of NIS 36 million, which is in addition to a dividend of NIS 140 million from the beginning of the year.
“We conclude the first nine months of the year with an increase in activity and profits. We are proud to show an increase in the network’s activity and see this as an impressive achievement, especially considering that 2020 was characterized by increased and abnormal customer consumption with the Corona virus outbreak,” Levy noted. “The increase in profit is due both to the growth in activity and to the steps we have taken to improve terms of trade with suppliers, and thanks to the continued transformation of the logistics center in Modiin for operational efficiency in the network. The company. “