Superpharm Delaying Payment for Goods Sold in North

Suppliers disgruntled at being forced to share the pain as drugstore keeps branches open

Superpharm, one of the most successful retail chains in Israel, has told its suppliers that it is postponing payment for merchandise supplied to northern branches for 30 days, TheMarker has learned.

"In the past two weeks the chain has made a great effort to keep the 20 branches in the north open and active, despite the drop in revenues," Superpharm commented. "Therefore we appreciate the compliance of all of our suppliers with our request, and thank those of them that came to us on their own initiative."

Superpharm's decision has led to disgruntlement among the suppliers.

"The chain is cynically exploiting the war on the backs of the suppliers who have incurred damages far greater than theirs," said one source.

For the suppliers, some of whom are situated in the north and have to pay their employees despite their being absent from work, and despite the drop in their revenues, the Superpharm payments are critical.

Insofar as is known, major retailers  such as Supersol and Blue Square, which also have branches on the front line, have not postponed payments.

Superpharm, the country's largest pharmacy chain, has 120 branches around the country, only 20 of which are in the north.

Since there are no statistics on drugstore chain sales, it is impossible to know how the war has impacted their results.

In the case of the food chains, it is clear that the war has harmed sales in the north: but sales in the south and center have risen and overall sales have remained stable, thanks to the northern residents who are staying in other parts of the country.

However, much of what Superpharm sells are luxury items, not staples like food. Its position may be worse than the supermarket chains.

The chain, which owned by Leon Koffler, is a privately-owned company. It finished 2004 with sales of NIS 2.31 billion, but its net profits are only 2 percent of revenues.

These figures come from a legal opinion, which the chain presented to Antitrust Commissioner Ronit Kan, opposing the proposed merger of Supersol and NewPharm at the beginning of the year.

According to United States magazine Chain Drug Review, which chose Superpharm CEO Lior Reitblatt as world retailer of the year in 2005, the chain's sales grew by 5.8 percent in 2005, reaching $500 million.