Despite a decline in its core operational profitability, Victory Supermarket Chain, managed and controlled by Eyal Ravid, reported relatively stable net earnings for the second quarter of 2025 — thanks largely to gains from investments in hedge funds and stocks.
The food retailer posted a net profit of NIS 9.5 million, marking a 1.5% decline compared to the same quarter last year. This stability came in spite of a 7.5% drop in operating income, which fell to NIS 22 million (3.25% of turnover).
Revenue Growth Driven by New Stores
Victory’s revenue rose by 2.5%, reaching NIS 661 million for the quarter, largely due to the opening of two new stores, which expanded the company’s branch count to 69 and increased its sales floor space by 2,700 square meters to a total of 74,000 square meters.
Same-store sales — a key retail performance metric — increased by just 0.4%, significantly lagging behind competitors Rami Levy (5.2%) and Yochananoff (5%). The modest growth was partly attributed to additional shopping days during the Iran war period.
Gross Profit Outpaces Revenue Growth
Victory’s gross profit rose 4.4% year-over-year to NIS 161 million, representing 24.3% of total revenue, up from 23.9% in Q2 2024. This figure outpaces the rate of sales growth and surpasses gross margins of both Rami Levy and Yochananoff.
According to CEO Eyal Ravid, the improvement in gross profit was not driven by price hikes, but by deeper supplier discounts. He attributed this to Victory's decision not to offer a private label, which typically competes with major supplier brands — a move that may have encouraged suppliers to provide better terms.
Victory’s operating margins, however, came under pressure due to a shortage of workers that raised branch-level salary costs, as well as increased rent, advertising, and head office expenses. Management bonuses for meeting performance targets also contributed to the squeeze.
Looking ahead, Ravid expects labor costs to decline gradually in the second half of the year. The company plans to increase the number of foreign workers from 180 to 600 by the end of 2025, which could ease salary pressures.
Financial Investments Boost Bottom Line
Despite the operating challenges, Victory offset the dip in profits with a NIS 2.3 million gain from financial investments. The company allocated 37% of its cash reserves — NIS 31 million to hedge funds and NIS 9 million to stocks — generating returns that helped cushion its bottom line.
Strong Cash Flow
The quarter also saw a significant improvement in cash flow from core operations, with NIS 51 million in surplus, up from NIS 35 million in the corresponding quarter last year — reflecting strong liquidity despite rising operational expenses.
Victory’s financial strategy of leveraging investment income has allowed it to stabilize earnings in a competitive and inflationary retail environment, even as operational challenges such as labor costs and weak same-store sales continue to weigh on its performance.
