Footwear and sportswear retailer Retailers Summarizes the fourth quarter of 2021 and the entire year with record results against the background of the return of shopping centers to full activity, increasing the number of stores and low passenger traffic abroad. In the fourth quarter of 2021, revenues from sales of retailers amounted to NIS 368 million, The third of the year and compared to NIS 171 million in the fourth quarter of 2020.
Retailers, which is controlled by the Fox Group, is engaged in the retail sale of footwear products, sportswear and sports accessories as well as leisure fashion. The company holds a franchise to operate Nike, Pot Locker and Dream Sports stores in Israel, Canada and Europe.
As of the end of 2021, the chain operates 141 stores, of which 99 stores in Israel (23 Nike stores, 68 Pot Locker stores and 8 Dream Sports stores). The company also operates 9 and 19 Nike stores in Canada and Europe, respectively, and 14 Pot Locker stores in Europe, through investee companies.
Throughout 2021, retailers’ activity grew from quarter to quarter, reaching a peak in the fourth quarter, in which gross profit grew by 139% compared with the corresponding quarter and amounted to NIS 196 million. The gross profit margin also improved throughout 2021 and rose in the fourth quarter to 53.4% of total sales revenue, compared to 48.1% in the corresponding quarter.
Operating profit jumped to NIS 61 million in the fourth quarter, compared with NIS 18 million in the corresponding quarter (3.4 times); While the net profit in the fourth quarter amounted to NIS 45 million, compared with NIS 10 million in the corresponding quarter (excluding the revaluation of an option granted to Leumi Partners).
In 2021 as a whole, the company’s revenue from sales grew by 76% to NIS 1.123 billion, gross profit increased by 83% to NIS 574 million, while operating profit jumped by 98% to NIS 147 million.
According to the company, the increase in revenue is due to an increase in sales in all segments, with the Nike stores segment showing a growth of about 81% in sales, while the Pot Locker stores segment showed an increase of about 61% in sales. This growth was due to an increase in the number of stores, as a result of an increase in SSS (sales in the same stores) and a shorter period of closure in the company’s stores in Israel in 2021 (51 days) compared to 2020 (139 days).
The increase in gross profit is due to an improvement in gross profit in the two main sectors (Pot Locker and Nike). The increase in operating profit is mainly due to an improvement in Nike’s results, which were offset by an increase in selling expenses in Pot Locker due to an increase in trading areas, due in part to European activity (which began in the fourth quarter of 2020) and an increase in general and administrative expenses.
Net income amounted to NIS 78 million in 2021, compared with a loss of NIS 30 million in 2020, when after deducting a one-time accounting revaluation for options (which affected both 2020 and 2021), net income in 2021 grew by 108% To NIS 96 million.
Simultaneously with the publication of the results, the company announced a dividend of NIS 36.4 million to shareholders.
Dubi Schneidman, CEO of Retailers, said today (Monday) that “I am proud to present excellent results for 2021, with growth in revenue and profits in both Nike and Pot Locker. The company continues with its strategic plan and continued growth in Israel and especially abroad, with the expansion of Nike stores in Europe and the expectation of opening 14-19 stores in 2022, as well as the opening of 7-9 Pot Locker stores in Europe. “
Schneidman added that “alongside activity in the international arena, in Israel we are continuing in further growth directions with Converse and Energies (subject to the completion of the transaction). Retailers continues the excellent momentum and continues to examine additional synergistic acquisitions at any time.”
Retailers is traded on the stock exchange at a value of NIS 4 billion, after its share has fallen by about 20% since the beginning of 2022. The company recently announced a strategic change in Nike’s policy and its impact on the supply of products to the global Pot Locker company. Last month, Pot Locker announced that following a strategic change in Nike’s policy and Nike’s focus on direct marketing channels to consumers (Nike and online stores), the rate of Nike purchases at Pot Locker is expected to decline, from about 70% to about 60%.
Following Nike’s new policy, Pot Locker stressed that it intends to take steps during 2022 in favor of continued long-term growth, including increasing the range of products and changing its mix of suppliers. However, in view of the new situation, the global Pot Locker management provided a forecast of an 8% -10% decrease in Pot Locker sales from identical sources (Comparable Sales Growth) in 2022, compared to 2021 data.
Following Pot Locker’s assessments and forecasts for the new situation, Retailers’ management estimated that if and to the extent that they did materialize, this could have a negative effect on revenues from Pot Locker stores operated by Retailers in Israel and Europe, similar to Pot Locker’s estimates.
Retailers, on the other hand, stressed that Nike’s new policy may have a positive effect on revenues from Nike stores operated by retailers in Israel, Canada and Europe, due to Nike’s focus on direct marketing channels.
In light of this, the management of Retailers emphasized that it is unable at this stage to assess the manner and extent of these conflicting effects on the results of the Company’s operations as a whole. In the meantime, the company plans to open between 20 and 44 new stores in 2022, of which 16-21 are Nike stores (mainly in Europe), 14-18 Pot Locker stores in Israel and Europe and 5 Dream Sports stores. All of these are expected to support continued growth in 2022 as well.