Recession hits Supersol: Q2 net fell 48% to NIS 28m

Retailers had a sorry second quarter, as the markets anticipated. Supersol (NYSE, TASE:SAE) today reported a steep 48% drop in its profit to NIS 28 million for the second quarter of 2002, versus NIS 53 million in the corresponding quarter of last year.

Its operating profit was NIS 37 million, down 56% from the corresponding quarter. its margin also narrowed, to 2.2% from 4.9% in the same quarter of 2001.

The company's results were impacted by the jump in consumer prices, which reduced its gross margins by some NIS 11 million.

Sales for the second quarter shrank 3% from the parallel to NIS 1.67 billion. Some of that decline is technical, due to the timing of the Passover holiday, which fell in the first quarter this year. (The Gregorian and Jewish calendars do not coincide.)

Supersol blamed the erosion in its results to the deepening recession and to competition in the retail sector. It also noted that same-store sales declined by 9.6%.

During the second quarter Supersol opened two new branches of its Hyper-Neto chain, and one store of the Birkat Rachel chain reopened as a farm outlet for the ultra-Orthodox sector. Four Hyper-Neto branches were converted into discount outlets and one other Hyper-Neto store was converted into a Cosmos outlet.

The consumer price index rose by 3.8% during the second quarter, bringing Supersol financing income of NIS 12 million on the erosion of unindexed financial commitments on unlinked financial assets. Altogether Supersol booked NIS 12 million net financing income, compared with NIS 2 million in the corresponding quarter of 2001.

For the half-year, Supersol's net profit shrank by 12% compared with the parallel six months to NIS 84 million, compared with NIS 96 million in the first half of last year. That includes NIS 27 million capital gains for selling its holdings in Avnet.

Sales however increased 4% in the first half of this year versus the parallel to NIS 3.44 billion, mainly due to the opening of new branches. Same-store sales contracted by 3.4%.

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