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Only a few weeks ago - shortly after having bought Israel Discount Bank from the state at what many described as a bargain price - Canadian-Jewish billionaire Matthew Bronfman snapped up the Ikea Israel franchise for NIS 164 million.

Bronfman bought the 75-percent controlling stake in Ikea Israel from the Blue Square Cooperative Consumer Society at a price reflecting a value of NIS 218 million for the single local branch, by the Poleg junction outside Netanya. From figures obtained by Haaretz, this purchase was another bargain find for the Canadian, giving the franchise of the Swedish furniture chain an earnings multiple of six.

Ikea's annual report for 2004 registers profits for the year of NIS 35 million, a 20-percent leap on the preceding year. In two years alone, Ikea Israel made profits of NIS 63 million. The branch's turnover reached NIS 345 million last year, compared to NIS 325 million in 2003. In other words, Ikea Israel posted a profit margin of around 10 percent, which is a particularly high margin for a retail chain. The company reported sales of NIS 211 million in 2001, and this was just for half a year, as it opened its Netanya branch only in June.

Ikea Israel's figures are all the more remarkable because the franchise consists - at least currently - of the single branch. One lonely, but well-visited store which turns a profit of NIS 3 million every month. Ikea's 23,000 square meter store in Netanya draws thousands of customers, often snarling up the traffic around the nearby junction.

Ikea Israel is scheduled to open a second local branch in 2006 in south Tel Aviv on a plot of 60-70 dunams, at a site as yet undetermined. The cost of building this branch is expected to reach NIS 50-60 million, and the company believes that the additional outlet will boost company sales by around 60 percent. This would mean annual revenues of over NIS 500 million for a two-store chain.

Ikea Israel's operating profit for 2004 reached NIS 60 million, a 50-percent leap on the NIS 40 million reported in 2003. At the same time, management expenses for the company fell from NIS 11 million to NIS 8 million.

Ikea Israel said that the chain does not comment on its financial reports.