Discount Israeli Grocery Chain Rami Levy Reports Revenue Boost

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Discount supermarket chain Rami Levy Shivuk Hashikma reported a 20% increase in revenues for the first quarter of 2013 relative to the first quarter of 2012.

These figures from the company’s quarterly financial report offer insight as to why foreign investors are interested in the company. Private investment funds controlled by American computer billionaire Michael Dell and Fidelity Investments, respectively, bought 12% of the company's shares in the past quarter.

The company, which owns a chain of 24 supermarkets known for offering deep discounts, has been one of the winners of the 2011 cost-of-living protests and the increased consumer awareness that followed.

Its profits were NIS 30.2 million, and its revenues were up 19.5% to NIS 755 million for the quarter, it said. This is partially due to increases of 16% in sales space – the company opened three new stores – and 10% in same-store sales, a figure that refers to sales at stores that have been open for at least a year and a common measure of retail health.

Gross profit increased 18.7% versus the parallel quarter to NIS 159 million, or 21% of total turnover. This is slightly less than the 21.2% figure from the parallel. The slight decrease in profitability relative to revenue reflects the ever-increasing discounts the company offered customers during Passover and amid growing competition. It is also in a better position to negotiate with suppliers given that its sales are now NIS 3.4 billion per year.

The company said the slight decrease in its operating profitability was due to higher costs, including real estate taxes (arnona), higher minimum wage, electricity and other operating costs.

Rami LevyCredit: Daniel Bar-On

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