The supermarket chain
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Reported growth of 13.6% in second quarter revenues to NIS 410.8 million, net profit more than doubled to NIS 16 million. The company’s share has soared by 56% since the beginning of the year and the company is now trading at a multiplier of 12 over the profit of the last 12 months – still the cheapest stock in terms of the profit multiplier relative to competitors. The CEO, Hagai Shalom: “In preparation for the Tishrei holidays, we will liquidate about 1,000 additional products.”
The Group’s total sales in the second quarter of 2020 amounted to NIS 410.8 million, compared with NIS 361.7 million in the corresponding quarter last year, an increase of 13.6%.
The net profit in the second quarter increased by 111.6% and amounted to NIS 15.7 million, compared with a net profit of NIS 7.4 million in the corresponding quarter last year.
The company also reports an increase in adjusted EBITDA (excluding the effect of IFRS16) by 103.5% to NIS 35.9 million in the second quarter of the year, compared with NIS 17.7 million in the corresponding quarter last year.
Source: Tiv Ta’am financial statements
The results of the second quarter come after the company began lowering prices at the beginning of the year in order to bring in new customers and fight branding as “a more expensive chain than it really is” (for the full article).
Improvement in the margin of gross and operating profitability
Gross profit in the second quarter of this year amounted to NIS 133.6 million (rate of approximately 32.5%), compared with NIS 112.4 million (rate of approximately 31.1%) in the corresponding quarter last year. Most of the increase is attributed to an increase in revenues as well as an improvement in trade agreements in light of the increase in sales, together with the increase in profit rates in the manufacturing sector, which was mainly due to the proactive cessation of nonprofit activities in the manufacturing sector.
The company’s operating profit in the second quarter of the year increased by approximately 51.4% and amounted to approximately NIS 27 million and at a rate of 6.6% of total sales, compared with NIS 17.8 million and 4.9% of revenues in the corresponding quarter last year.
Hagai Shalom, CEO and controlling shareholder of Tiv Ta’am: “We are pleased with the results of the second quarter of 2020 and the results of the entire median year, in which the trend of increasing sales and strong growth in all operational and financial parameters continues. Beyond the impact of the corona, all chains, Tiv Ta’am enjoyed high growth in the new price concept. Price for about 1,000 basic products for Shufersal Deal prices and the granting of a free members’ club. Many have frequented the chain stores, becoming regular and loyal customers and club members, joining which is free, part of the new price concept.
“We will continue, therefore, to deepen the approach of lowering prices, and in the run-up to the Tishrei holidays, about 1,000 more detailed products will be discounted, along with about 1,000 lowered products, and here too the reference will be to Shufersal Deal prices – that is, prices That the audience will respond as it did during the first, or then, it was found that more can be earned on the basis of price reductions and not necessarily, by raising them ”.
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