(NYSE:SAE) supermarket chain today posted a marked rise in its sales and operating profit for the first quarter of 2001, much to the satisfaction of its main shareholder

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But Super-Sol's net profit decreased to NIS 40 million, which is NIS 1 million less than in the same quarter of 2000. The drop is mainly due to increased funding expenses, which came to NIS 10 million in the first quarter, compared to NIS 7 million in the first quarter of 2000. The increased funding results from Super-Sol's aggressive dividend distribution policy. Over the past 12 months, the company has distributed dividends worth NIS 338 million.

The company's revenues increased to NIS 1.48 billion, which is an 8.6% rise compared to the first quarter of 2000. At that time revenues came to NIS 1.36 billion. The rise is attributed to the financial contribution of the new Super-Sol stores opened last year. These branches were not incorporated in the first quarter of 2000.

Super-Sol did not have any special revenues during the first quarter this year. During Q1 of last year, capital gains of NIS 11 million were included in the firm's results, following the sale of two plots of land that were owned by a Super-Sol subsidiary.

Super-Sol Chairman and CEO Amiaz Sagis notes that the sales of private-label products grew to 5.3%, compared with 3.1% in the first quarter of 2000, and 5% in the fourth quarter of 2000.

In the first quarter of 2001, Super-Sol continued with its policy of accelerated expansion policy, opening three new stores. This policy will be continued in the second quarter, with two more new Super-Sol branches set to open.

Super-Sol has 154 stores: 90 Hyper-Netto stores, 41 Super-Sol stores, 7 Universe Club stores, 7 Birkat Rachel stores, and 9 Cosmos stores located throughout Israel.

The company's Q1 growth is also related to an early Passover holiday, which was reflected in its first quarter results.

But Super-Sol continued to suffer from decreased sales in some stores, which in the first quarter of this year dropped 3.7%, compared to the first quarter of 2000. Super-Sol claims the decline is due to the opening of its additional stores, as well as the opening of new stores by its competitors. The firm also cites the continued economic slowdown as another reason for the drop.

Regarding phone, fax and Internet sales, Sagis says that the supermarket chain launched a new website in February 2001, and also improved its product distribution to on-line consumers. Super-Sol introduced, among other things, special distribution vehicles equipped with storage systems for frozen goods and products that have to be kept cool.

Sagis expects telephone and Internet sales to comprise 2% of the company's total sales. At present, web-based sales account for 15% to 20% of aggregate sales.

During the first quarter of this year, the firm's operating profit increased to NIS 73 million, which is 13.7% more than in the first quarter last year. The operating-profit rate grew to 4.9%, compared with 4.7% in the parallel period last year.

Super-Sol's gross profit increased to NIS 402 million, which is 10.5% more than in the same period of the previous year. Its gross-profit rate increased to 27.6%, compared with 27% in the same quarter in 2000.

The supermarket chain attributes its continued rise in gross-profits to its increased in-house distribution, (from a new distribution center constructed in Rishon Letzion); the growth in the sales of its private-label Super Class products which have a higher profitability; and improved stock management.