The control of food prices/spokesperson of the State Comptroller
There are businesses for whom the war of iron swords did nothing but good, or at least did not worsen their situation, so if we judge the business results of the Israeli retailers traded on the Tel Aviv Stock Exchange as detailed in their financial reports for 2023.
And not only their financial results. Also the shares of the 5 retail companies tested by Walla! Silver (see table) have risen an average of 22.8% since the beginning of the year, compared to the Tel Aviv 125 index, for example, which rose 7.81% for the same period. The
highest increase was recorded in the local retail giant Shufersal, whose control passed about a month ago to the Amir brothers, who purchased 24.9% of its shares. Its revenues for 2023 increased by approximately 3.5% and amounted to approximately 15.2 billion shekels that year, alongside a profit of 323 million shekels.
The Tiv Taam share closes the table from the bottom with an increase of 0.44%, and concludes the year 2023 with an increase of approximately 4.8 % in its revenues alongside a decrease of about 39% in profit for that year. The decrease was explained by Tiv Taam, among other things, in the increase in the cost of labor, the increase in the index and an increase in inputs as a result of an increase in the prices of services.
The Israeli retailers traded on the stock exchange/image processing, Walla system!
Together with Carrefour (formerly Bitan and Mega Wines), whose business results for 2023 were detailed in the financial report of Electra Consumer Products Company, the revenues of the 6 largest retailers in Israel stood at approximately NIS 33.6 billion for that year, alongside a profit of approximately NIS 760 million, which Carrefour's loss has already reached about NIS 1 billion.
Although this is a modest average profit rate of about 2%, it contains, as mentioned, a lot of money, which made it possible to reward the managers of the chains in the millions of NIS. For example, Shufersal's chairman and CEO received in 2023 a salary and shares worth approximately NIS 8.2 million and approximately NIS 6.9 million, respectively.
The total compensation of the CEO of the Yohannoff chain, and of his father, who serves as chairman, was approximately NIS 4.3 million and approximately NIS 2.4 million, respectively , for the same year, and the total compensation of Rami Levy, who serves as director and CEO of the network that bears his name, was about NIS 3.5 million for the period.
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Empty shelves at the beginning of the war. "In October we experienced a growth of 17%, which led the entire fourth quarter to a growth of about 9%"/Reuven Castro
What led to the surge in stocks and the growth of retail activity despite the social polarization that stood out publicly following the legal reform and the war of iron swords, which only strengthened the economic uncertainty surrounding the Israeli economy since the trend of rising interest rates began?
Shira Ahiez, a retail analyst at the IBI investment house, explains: "The effect of the war of iron swords on the Israeli retail sector was mainly in the month of October 2023 and resulted from the closure of hotels, cafes and the lack of flights abroad.
"All of these caused more Israelis to stay in the country and at home, and as a result led to excess consumer demand in the retail companies that month. So if growth in the sector is usually at a low single-digit rate, which is around 2%, in October a growth of 17% was experienced, which led the quarter The entire fourth for a growth of about 9%.
"The war is not the only catalyst for the increase in business results, that part of the income in the companies was also contributed as a result of the increase in prices, especially in the fresh products such as meat and fruits and vegetables. Along with this, it should be remembered that retailers are forced to raise prices due to an increase in inputs such as wages, fuel, electricity, and other expenses linked to inflation, alongside costs due to currency exchange rates as a result of imports.
"The financial results of Shufersal, for example, were indeed contributed as a result of the war, but in addition they were contributed by a significant efficiency plan that is evident in the differences in the business results compared to the year 2022, and especially in the jump of tens of thousands of percent in the net profit.
"The profit presented by the company for 2022 does not represent its activities along the axis the time, but was harmed mainly due to the provisions it made for the efficiency plan alongside one-time expenses resulting from management changes. The same plan that came to fruition as a result of losing market shares and erosion in profitability. Today's profit levels are returning to those of 2019."
I dare "The results were contributed by the increase in prices, especially in the fresh products such as meat and fruits and vegetables"/Ilan Bashor
Ahiez explains that "even in the Yohannoff chain, for example, the improvement in profit is not a characteristic of a normal level of profit, and is due, among other things, to the recognition of a loss of NIS 38 million during 2022 following its investment in the A2Z company, compared to the recognition of a loss of NIS 2 million in 2023.
"In addition, The company grew close to 10% and continued to become more efficient, thereby increasing its absolute profit, and in its context it should be noted that the chain froze the price level to maintain attractiveness as part of its activity to increase its market share.
"The increase in the shares of the sector, however, do not necessarily characterize the results of the companies or the distortions of the war. Most of the increase experienced in Shufersal shares, for example, is attributed to the purchase of control of it at a premium by the Amir brothers, which was a move that supported the share price.
"The purchase move also contributed to the increase in general sector shares. But it is worth noting that the noticeable increases in the shares come after significant decreases experienced by the companies' shares in 2022.
"The year 2024 is expected to be a challenging year for the retail chains as well, as the increase in prices will continue to accompany the sector and burden households, and consumers may become more selective in the supermarket.
" In addition , the increase in inputs will continue, such as another increase in the minimum wage this April, and the expenses related to the increase in inflation continue to rise, even if at a more moderate pace.
"Growth in the retail companies, however, is expected to continue, especially in light of the retailers' dedication to efficiency, alongside the trend of price increases contributing to their revenues. In addition, the retail companies have additional growth engines, such as the Good Pharm chain owned by Rami Levy, and the Zol Stock chain owned by By Yohannoff. In terms of stocks, precisely under conditions of uncertainty, the retail sector is considered defensive, and can benefit from this."
More on the same topic:
Rami Levi
Yohannoff
victory
Tiv Ta'am
Shufersal
Carrefour