Rami Levy concludes 2020 with a 54% increase in net profit

The company’s board of directors, which distributed NIS 115 million in dividends during 2020, decided last night with the publication of the annual reports on the distribution of a NIS 50 million dividend.

Food chain sales rose 8.3% last year to NIS 5.95 billion. The increase was achieved against the background of the opening of 3 new stores, two of them in the second half of 2019 and the third in 2020, as well as the positive impact of the Corona crisis on food shopping.

Identity store sales, which were also fully active in 2019, increased by 6.3% compared to 2019. This is a low growth in relation to the growth of the consumer goods market (food, beverages, care and cleaning), which amounted to 9.2%.

It can be estimated that the chain, which operates large branches, without an arm of neighborhood stores, was hit by consumers moving to shopping in small stores near their place of residence, both due to traffic restrictions set as part of the Corona crisis management and fear of crowds in large stores.

The chain’s gross profit increased by a sharper rate (16.3%) compared to sales and amounted to NIS 1.27 billion. The increase made it possible to improve gross profitability by 21.4% of sales compared to 19.9% ​​in 2019. The increase in gross profit enabled Rami Levy Sycamore Marketing, which faced an increase in expenses and their share of sales, to record a 39% increase in operating profit, which amounted to NIS 246 million. The sharp rise allowed the food chain to improve operating profitability to 4.1% of sales compared to 3.2% in 2019.

Along with the food chain, which is the core of the activity, Sycamore Marketing controls (60.3%) the Kopix chain, (50.01%) the Good Pharm chain and the entire Rami Levy Communications company. Sales of these activities increased by 20.9% to NIS 540 million and the company’s share in the investee companies increased by 63% to NIS 17.8 million.

The group’s gross profit increased by 18% to NIS 1.36 billion, so that gross profit increased to 22.6% of sales compared to 20.8% in 2019. Maintaining the rate of expenses from sales, made it possible to jump the gross profit by 44% to NIS 281 million and improve operating profitability to 4.3% compared to 3.3% in 2019. The group’s net profit amounted to NIS 175.7 million.

For Sycamore Marketing, which operates 53 branches nationwide, a plan to open 7 more branches in Or Akiva, Shoham, Hadera, 2 in Petah Tikva, Netanya, Beer Sheva, Migdal Haemek, Ness Ziona and Kiryat Gat, as well as 3 neighborhood stores in Or Akiva, Ness Ziona and Hadera.

From tests it conducted, the company believes that the opening of another 20 additional discount branches throughout the country in demand centers will not result in a loss in sales of the company’s existing branches.

The sales share of Rami Levy’s private label has increased significantly in recent years and in 2020 it accounted for about 20% of the chain’s sales, making it the fifth largest supplier. The chain intends to increase its private label share to about 25% of the chain’s sales, which is expected to improve its gross profitability.

Sycamore Marketing is also preparing to increase its online sales, which in the past year accounted for 8.6% of its sales. The company intends to expand the deployment of the branches from which online orders are collected, thus reaching a nationwide distribution of online sales.

In addition, as part of the agreement that the company has with Commonsense Robotics, which provides robotic collection services for online orders and already operates such a center at the Shalom department store in Tel Aviv, another facility is expected to open in Be’er Sheva in the second quarter.

The company expects that the full operation of the 12 planned robotic facilities will lead to an additional sales of NIS 1.5 billion when launched, without biting into sales at the company’s branches.

Sycamore Marketing intends to address the lack of activity in the city centers by expanding the “Rami Levy in the Neighborhood” brand, by opening new branches, converting existing Super Kopix branches and by purchasing competitors’ stores.

The municipal branches will operate in an area of ​​700-300 square meters per branch and the company estimates that there is room to open 100-80 branches in an urban format, within about 4 years, including Super Kopix branches, which will provide service in city centers under the company brand, and compete in municipal formats. .

To date, 18 Super Kopix branches have been converted into neighborhood supermarkets operating under the name “Rami Levy in the neighborhood” and the company intends to convert another 15 branches in this way by the end of the third quarter of the year.

The company intends to strengthen its presence in city centers also through the expansion of the Pharm Good Pharm chain, which will be integrated into the customer club, credit card club and its online sales and explore synergies in various areas such as headquarters, supplies, storage and branches.

The company intends to open about 50 more Pharm branches in the coming years, which will be added to the 30 existing branches. In addition, Good Pharm is expected to change its business model, among other things by expanding its cosmetics and grooming departments, so that it will also include cheap makeup brands popular with young consumers, and the establishment of dedicated shelves for products priced over NIS 10, close to checkouts.

Another growth engine that marked sycamore marketing and touched on wholesale sales – similar to the activity of competitor Shufersal, which operates the straw and curry format for container owners and small businesses. The expansion of operations, which amounted to NIS 113 million last year, an increase of 52.7% compared to 2019, will be carried out through the establishment of dedicated sales centers for this purpose as well as through the company’s logistics center. The first center is expected to open in the second quarter of this year in Haifa.

The salary cost of the company’s 5 senior executives in 2020 amounted to NIS 8.1 million. The salary cost of Rami Levy, the controlling shareholder (39.46%) who serves as the company’s CEO, amounted to NIS 3.59 million.