Impressive achievements for Rami Levy Shivuk Hashikma in the first quarter of 2023 (Photo: Reuven Castro)
The chain of food stores, Rami Levy Shivuk Hashikma, published this morning its financial results for the first quarter of 2023, indicating growth in the volume of activity.
It seems that Rami Levy's strategy of making competitive prices accessible and an alternative product basket, broader and cheaper than the private label category, is reflected in the increase in the number of customers in the chain's branches.
In the financial statements concluding the first quarter of 2023, it is evident that the increase in the number of customers led to impressive achievements and an increase in revenue and net profit of shareholders.
Rami Levy, CEO of Rami Levy Shivuk Hashikma: "In the first quarter of 2023, we see an increase in the phenomenon of smart shopping. The consumer makes more and more comparisons of prices and brands, and chooses the cheaper brand more times, and finds that he also enjoys high quality. This is reflected, among other things, in the chain's private label sales, which continued to grow, reaching a record high of more than 25% of total sales in the quarter.
In my assessment, the continued increase in inflation and interest rates in the economy may serve as an additional catalyst for increased demand for the private label network and smart purchase, and for competitive products of many brands in various consumer fields."
A significant increase was reflected in the number of customers of the chain, which led to an increase in net profit compared to the same period last year, to which Levy added: "In recent quarters there has been an increase in the number of visitors to Rami Levy's branches, which is also reflected in a sharp increase of about 9% in revenue in identical stores, following an increase of 4% in the previous quarter."
Levy refers to data indicating a decline in revenue in this quarter compared to the corresponding quarter of 2022: "Most of the decline in revenue that appears in the consolidated report derives from exceptional revenues of about NIS <> billion due to the sale of an antigen test in the corresponding quarter of last year, so that excluding this effect, we ended the current quarter with revenue growth."
Making competitive prices and a wide range of discounted products available in the private label category, Rami Levy Shivuk Hashikma (Photo: PR)
"We welcome the entry of new networks - competition is a good thing"
Referring to the entry of the huge French retail chain Carrefour and the media storm surrounding its impact on the cost of living, Levy said: "We welcome the entry of new chains and support any move that will help lower the cost of living and the high costs that consumers are forced to pay today. Competition is a good and important thing, and we have always been the leading generators of competition in the Israeli economy – we have a part in influencing the reduction of the cost of living in Israel and this is a mission for us."
The main results for the first quarter of 2023 include:
Revenue – Revenues in this quarter totaled about NIS 1.76 billion, compared with about NIS 1.86 billion in Q9 3. The change in revenue in the quarter was mainly due to the fact that in the corresponding quarter of last year, the company recognized exceptional revenues of about NIS 7 billion from the sale of antigen tests through its subsidiary Good-Pharm. This effect was partially offset by the sharp increase in identical store revenue of about 442.414 percent.
Gross profit – Gross profit in this quarter increased by about 25% to about NIS 1 million, compared with about NIS 22 million in the corresponding quarter of last year. The increase in gross profit, despite the aforementioned decline in revenues, derived mainly from the improvement in gross profit in the quarter, to about 2.300 percent, compared with about 103.5 percent in the corresponding quarter of last year, as a result of increased efficiency in distribution through the logistics center, an increase in independent imports by a sharp rate of about 9%, an improvement in trade conditions, and an improvement in the gross profitability of the subsidiaries.
Operating profit – Rami Levy Shivuk Hashikma's operating profit amounted to NIS 5 million in this quarter, similar to the corresponding quarter last year. Operating profit margin for the quarter increased to about 6.2022% compared with about <>.<>% in the corresponding quarter of <>. The increase in the operating profit rate was mainly due to the aforementioned increase in gross profitability, which was partially offset by the increase in the operating expenses rate, mainly an increase in employee wages, rental expenses and maintenance expenses.
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Rami Levy, CEO of Rami Levy Shivuk Hashikma "We welcome the entry of new networks into Israel" (Photo: Courtesy of Rami Levy)
Since the beginning of operations, NIS 1.4 billion has been paid to shareholders
Net profit – In this quarter, there was an increase of about 7% in net profit attributable to shareholders to NIS 67 million, compared with about NIS 63 million in Q2 173.
EBITDA: In this quarter, operating profit plus depreciation increased by about 9% to about NIS 9 million (about 170.9% of revenues), compared with about NIS 1 million (about 2023.34% of revenues) in Q187 140.
Cash flow from operating activities: In the first quarter of 1, cash flow increased by about 03% to about NIS 14 million, compared with about NIS 31 million in Q03 2023.
Cash and Investments – The company has a cash fund and short-term investments of NIS 1.01 billion, while the company has gross financial debt of NIS 51 million, according to a balance sheet as of March 172, 12. In other words, the company has a net surplus of financial assets totaling NIS 2007.1 billion, and the increase in the interest rate in the economy has a positive effect on the company's large cash reserves due to the expected increase in interest income.
The company announced that it is earmarking NIS 4,<> of its cash fund for a strategic investment, which will lead to an increase in the average shopping basket of the company's customers at the company's branches, and the company is examining such investments.
Dividend distribution – Concurrently with the approval of the reports, the company declared a dividend distribution in the amount of NIS <> million, in addition to a dividend distribution of NIS <> million over the past <> months. Since its IPO in May <>, the company has distributed dividends totaling NIS <>.<> billion.
Sales share in the private label category - record-breaking with 25.3% of total sales, Rami Levy Shivuk Hashikma (Photo: PR)
The network's plans for the near future
The company intends to continue expanding the activity of discount branches - Rami Levy Shivuk Hashikma currently operates 56 branches (of which, 3 are franchised).
The company identifies the potential for the establishment of about 25 additional discount branches in new areas where the chain does not currently operate, and estimates that the opening of the new branches will not cannibalize the chain's active branches.
In addition, the chain will continue to open municipal branches, including directly, and will continue to deepen the penetration of the private label.
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