Victory: 36% decrease in operating profit

At the end of the fourth quarter, the company’s revenues fell by 8.9% to NIS 550 million, compared with NIS 604 million a year earlier. The reason for the declines in sales is that 2020 is the year of the corona, a record year in retail sales. Revenue from same-store stores decreased by 9.4% compared to the corresponding quarter. The gross profit for the quarter amounted to NIS 140 million, compared with a gross profit of NIS 153 million in the corresponding quarter. Operating profit reached NIS 16.4 million, compared with NIS 25.8 million – an operating profit rate of 3% compared to 4.3% in the corresponding period last year. The net profit in the fourth quarter amounted to NIS 8.4 million – 44.3% less than a year earlier, when the net profit reached NIS 15.1 million

In annual summary, the company’s sales decreased by 2.7% to NIS 2.31 billion, compared to NIS 2.38 billion in 2020 and compared to NIS 1.75 billion in 2019 before the corona. The revenue per square meter was NIS 35.1 thousand compared to NIS 36.2 thousand a year earlier and NIS 32.3 in 2019. The revenue in identical stores was NIS 35,000 compared to NIS 36,000 in 2020.

Gross profit reached NIS 586 million, compared with a gross profit of NIS 604 million, a decrease of 8.9%. Operating profit was NIS 89 million, compared with NIS 105 million in the corresponding period last year. The operating profit margin was 3.9% compared to 4.4% in the corresponding period. Net profit amounted to NIS 50.7 million, compared with NIS 58.1 million, a decrease of 12.7%, which is mainly due to the decrease in sales and the damage to the margins.

Recently, populist MKs have attacked the retail chains, claiming that their margins are too large and unusual, but as we have shown in the previous quarter, this is simply not true. The farmers are responsible for 50-60% of the price you pay at the supermarket for fruits and vegetables, the government committee to examine the brokerage gaps stated last week, which added that the profitability of retailers in Israel is not exceptional compared to other retail companies in the world. In addition, importers and manufacturers such as Strauss with an operating profitability of 11.7% or Snow with an even higher operating profitability of over 15% also bear a significant responsibility for the cost of living.

In addition to the reports, the company states that it is working to open 8 new branches during 2022 – 2023 with a total volume of 11,000 square meters that will join the 67.5 thousand square meters of existing branches. The Victory City sub-chain is working to open 7 branches in Tel Aviv, and it hopes to improve its gross profit through them (since stores within the city usually charge higher prices). The company intends to open up to 50 branches in Gush Dan with sizes of up to 300 square meters.

Victory is traded at a value of NIS 910 million after a decrease of 20% in the last 12 months. The company’s net profit in 2021 reflects a profit multiplier of about 18 compared to Shufersal’s 19.7 multiplier. The company’s stock is now trading with no significant change in value.

Eyal Ravid, CEO of Victory: “After a record year in the Corona, we took advantage of 2021 to maintain and expand our market shares, despite a decrease in consumption compared to the Corona year. In light of the chain’s strength, we also launched a strategic plan for growth through the Victory CITY sub-chain with new branches in the center of the country, which is expected to contribute additional revenues of NIS 500 million, along with the growth and organic development of the branch network throughout the country. In light of liquidity and financial strength, we continue to examine the acquisition of branches and other chains. Looking ahead, we see continued growth in the volume of activity that supports better trading conditions, an improvement in the network’s profitability and absolute profits. ”

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