• Of money

"Looking ahead, there may not be any more price increases"

The retail chains have presented excellent reports, although the impact of the corona has dissipated.

What were the reasons and how does it affect us as consumers?

We turned to experts

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• Tiv Ta'am

• Shufersal

Sonia Gorodisky

Monday, 29 November 2021, 14:23 Updated: 16:39

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The financial reporting season is in full swing, and it's hard not to notice the good results presented by some of the supermarket chains.

This is despite the fact that the corona's influence has dissipated, and the images of Israelis preparing for another closure seem farther away than ever.

More on Walla!

Shufersal: Decrease in revenues and net profit

To the full article

Work efficiently.

Tiv Ta'am (Photo: Assaf Lev)

Thus, for example, Tiv Ta'am ended the third quarter with a 39% jump in net profit to NIS 19 million, while the net profit of the Yohannoff chain, which opened new stores, jumped 180% to NIS 29 million. Rami Levy has not yet published its reports, but they are also, according to estimates, expected to be strong. The Shufersal chain, which is at the center of the Competition Authority's investigation on suspicion of price coordination, recorded a decrease in sales and a net profit of 15.5% to NIS 82 million, but improved its gross and operating profitability. The Victory chain, whose owner was investigated by the competition authority, also recorded a 20% decrease in net profit, which amounted to NIS 12.6 million.

At the same time, some of the suppliers have recently announced the increase in the price of their products, and the Competition Authority has opened an investigation into price coordination between food chains and suppliers. Are the good results of food retailers explained by proper business conduct and efficiency or can we also learn from them about price increases? We turned to experts in the field to try to get answers.

"It is not clear whether the increase in the margin of gross profit is also due to an increase in prices"

Ilanit Sharaf (Photo: Rami Zranger)

"In most of the chains that have published so far, an increase in the margin of gross profit can be seen, this is usually explained by improved trading conditions and operational efficiency, and it is not clear whether it is also due to rising consumer prices." Silver Ilanit Sharaf, Director of the Research Department at Psagot Investment House.

At the same time, Sharaf notes the decline in sales of most chains as a result of the opening of the economy and a return to routine activities: "In addition, in chains where there is activity in the institutional market that includes the restaurant sector, there was another offsetting effect (especially in Shufersal and the Tiv Ta'am chain). In chains that continued to open branches and expand the chain, there was an increase in sales."

"Tiv Ta'am has lowered prices"

Nadav Lauren Wurzner, analyst at Harel Finance's research department, believes that the results of the supermarket companies were not affected by the price increases for the consumer, but are mainly due to the companies' streamlining in recent times.

"These companies have succeeded in producing new growth engines - expanding online, entering other areas such as Pharm for Shufersal, Zolstock in the Yochananoff chain and more."

Can smile.

Eitan Yohannoff (Photo: Geva Talmore)

Nadav Lauren Wurzner (Photo: Sabrina Lauren Wurzner)

"The results are not related to the price increases and all the provisions in question. We do not yet know what will happen with those provisions. Therefore, I link the positive business results to the companies themselves and the activities they do, each and every activity relevant to it. Looking ahead, it may be that In the media, there will be no price increases from now on. "

Lauren Wurzner explains: "The price increases, if there were any, are an outgrowth of the price increases of the suppliers who actually rolled it over to the retailers who rolled it over to the end consumer. But that's not the main improvement. Compared to the corresponding periods in which increased consumption was affected by the corona and closures, more people purchased food over the Internet excessively. This phenomenon no longer exists, so it is very difficult for companies to restore the results in the third quarter of 2020 The logistical set-up of the shipments. "

Summary of the financial statements published so far

• The Shufersal chain saw a decrease in sales volume due to the fading of the Korna effect, as noted, which was offset by an increase in sales to the institutional market along with a continued increase in the volume of BE activity that continues to develop, even beyond the chain's early forecasts.

  At the same time, the increase in gross profit is explained by an improvement in trading conditions along with operational efficiency.

  In the operating profit line, the chain continues to show an improvement in the significant portion recorded against the background of the BE network's transition to profit compared to the loss recorded in the corresponding quarter.

• In the Victory chain, there was a decrease in the volume of sales against the background of the dissipation of the corona effect, which led to a decrease in sales in identical stores.

  Gross profitability remained stable with no significant change and in line with the trend from the previous quarter.

  Operating profit decreased as a result of a decrease in sales volume and in the face of stability in the Company's gross profit margin.

• In the Yohannoff chain - the chain showed sharp growth in sales, especially in light of the continued expansion of the chain and the opening of new branches alongside the acquisition of the Cheap Stock chain.

  Yohannoff also showed a slight increase in sales of the same stores.

  The Yohananoff chain also showed an increase in the rate of gross profitability explained by efficient inventory management and an improvement in the purchasing power and trading conditions of the group, along with higher profitability on the cheap stock.

  This improvement is also reflected in the network's operating profitability.

• In the Freshmarket chain - recorded a decrease in sales volume as a result of a decrease in the activity of the same stores, as a result of a decrease in the corona effect.

  Along with this decrease, there was an increase in the rate of gross profit, which is also explained by Freshmarket by an improvement in the company's trading conditions but also by a change in the sales mix.

• The Tiv Ta'am chain recorded an increase in the company's sales volume.

  The increase was recorded following an increase in the volume of sales of the same stores as a result of an increase in the company's customer club alongside the timing of the Tishrei holidays as noted.

  The rate of gross profit from the retail sector remained stable, or rather recorded a minor decline due mainly to a strategic move in which the company has been taking a long period of change in consumer price perception and price group reduction (remember that Tiv Ta'am is a luxury chain). .

  It should be noted that Tiv Ta'am showed a significant improvement in operating profit both as a result of the retail sector and as a result of additional activities.

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