Hamashbir Squeezed to Pay Rent, Close Up Shop in Malls

The revamped Hamashbir department store chain is fighting a battle to keep some of its stores open. The New Hamashbir store in the Sharon Mall, Netanya, is likely to close in the next few months, as its current rental contract is coming up for renewal and the mall's management is planning to add a clause that allows it to force Hamashbir to vacate the premises, with notice.

Management at two other shopping malls, Ramat Aviv in North Tel Aviv and at Petah Tikva, have asked Hamashbir to vacate their premises as, they claim, the chain owes outstanding rents, and their turnover is too low to justify such a large presence in the malls.

Hamashbir's store occupies 4,000 square meters in the Sharon Mall, Netanya, whose total retail area is 20,000 sq.m. While sources in the industry believe Hamashbir is looking to sublet some of this space to other shops, mall CEO Shmulik Ben-Moshe refused to comment on such reports.

Rami Shavit, who bought out the troubled Hamashbir Lazarchan department chain earlier this year, said Sunday that the company "constantly checks its continuing rental situation in each and every shop. Concerning Netanya, that mall has suffered from a significant drop in business as a result of the terror attacks in the city ... I will do what is best for the success of the chain. Our relations with the Sharon Mall management and the property owners are good, and we will do everything to cooperate for everyone's best interest."

Monthly sales at Hamashbir in the Ramat Aviv mall have dropped from $720 per square meter in 2002 to $670 per sq.m. in 2003, though not all of this may be specifically attributed to the chain. Benny Cohen, head of the shopping mall division of Africa Israel, owners of the Ramat Aviv Mall, said that Hamashbir's sales had dropped from NIS 7 million a month to NIS 2 million. Hamashbir has invested heavily in renovating the store in the upmarket mall, and bringing in several new designer names.

The Sharon Mall has troubles of its own. It is one of the first malls to have to cope with the large food chains closing shop, with a heavy impact on the mall's appeal. Last February, Blue Square Co-Op closed its branch, and the site passed only last month to businessman Eli Lahav who opened a cut-price food store in its place.

Shavit bought Hamashbir from the department store chain's receivers earlier this year, and immediately reduced the number of its stores from 31 to 25. A large part of its merchandise is bought on consignment (that is, still owned by the suppliers, who are paid on a by-sale basis). While under appointed management, and before Shavit bought the company, Hamshbir had also decided to close a number of loss-making stores.

Although the chain has claimed in recent months that its sales are consistently growing, the stores' landlords dispute this.