Clubmarket Falls Behind in Rent on Jumbo Glilot Branch

Grocery retailer Clubmarket is behind on the rent on the flagship branch of its discount supermarket chain Jumbo, Haaretz has learned. The 6,500-square-meter store is located at Glilot junction. Some suppliers have also been asked to delay billing for products or to accept installment payments.

Clubmarket does not publish the rent it pays to landlord Hypershuk 88, owned by foodstuffs conglomerate Tnuva and IDB Holdings. Multiplex Cinema City, which rents 8,000 square meters on the second floor of the same complex, pays $12 per meter or 12 percent of turnover, whichever is higher.

IDB flatly denied the report. Tnuva was not available for comment.

Clubmarket stated: "The Clubmarket chain ended 2004 with positive cash flow of tens of millions of shekels. We successfully implement our business plan, through continued reliance on growth engines including the Jumbo stores, the private label Premier Club and continued implementation of investment plans.

"That success has many partners, including suppliers, with whom we have no differences of opinion. Retailers routinely examine credit terms with suppliers, part of their commercial conditions, to improve profitability."

Since Clubmarket was acquired by the Mozes-Borovich-Rosen group in 2001, the new management has implemented an extensive streamlining plan that included closing 25 branches, converting 40 branches to hard discounter Hetzi Kupa and opening more Jumbo branches. The recovery plan eliminated 1,800 jobs, about 33 percent of the retailer's workforce. In July 2004, the chain eliminated 50 administrative positions and cut executive compensation.

Israel's third-largest supermarket chain, Clubmarket is privately held and does not publish its financial results. Its 2003 sales were over NIS 3.3 billion.

A lawsuit was filed recently against Clubmarket for defaulting on a rent payment. Landlord Mareh Hamifratz asked the courts for an ex parte attachment on Clubmarket assets, claiming the retailer had not paid rent on a branch near Acre. Clubmarket argued that the property-owner had not fulfilled promises regarding the other stores in its shopping center.

Market researcher AC Nielsen found that Clubmarket lost 2 percent of sales turnover in 2004, despite being the only one of the major grocery chains to post growth in 2003. Nonetheless, Jumbo branches held their own and garnered 4.8 percent of the consumer products market, up from 4.5 percent in 2003.