Fox Group Faced Profit Decline Amidst War Challenges: Net profit amounted to NIS 25.6 million

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by Ifi Reporter Category:Financial Nov 30, 2023

In the wake of the ongoing conflict, Fox Group, a prominent retail conglomerate under the leadership of Harel Wiesel, has reported a significant downturn in revenues, anticipating a 10%-15% decrease since the beginning of the war. Today, the company announced that this decline is expected to have a substantial negative impact on its fourth-quarter reports for 2023. The repercussions may persist into subsequent quarters, contingent upon developments on the security front.

Acknowledging the challenging circumstances, Fox Group is actively engaged in negotiations with malls and property owners to mitigate the financial strain. Talks center around improving rental conditions and management fees, tailored to accommodate the unique challenges posed by wartime operations.

While some of Fox Group's stores, particularly those operating under the Nike, Mango, and Lin brands abroad, remain unaffected by the conflict, the company has faced additional economic headwinds. Prior to the outbreak of war, Fox Group grappled with the adverse effects of inflation, experiencing a nearly NIS 10 million increase in rent and management fees from the beginning of the year until the end of the third quarter.

Despite the challenging economic climate, Fox Group expanded its commercial footprint in the third quarter, opening new stores primarily in the sports sector both domestically and abroad. This expansion contributed to a 12.3% growth in revenue, reaching NIS 1.4 billion. However, the growth was tempered by a 14% increase in marketing and sales expenses, amounting to NIS 667.4 million, and a 32.8% rise in administrative and general expenses due to increased salary costs.

Specifically, Fox's sports sector, comprising Nike, Foot Locker, and Dream Sports stores, experienced an 8% decline in profit. Although new stores led to a 30% increase in sector revenues, the overall operating profit for the group plummeted by 30.7% to NIS 70.6 million. Net profit, in turn, saw a stark 49% drop, settling at NIS 25.6 million for the quarter.

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