Max Stock chain reports the signing of an official agreement to open stores in Portugal

The Max Stock chain publishes the financial results for the second quarter this morning and reports the signing of an official agreement to open stores in Portugal. The company announced the distribution of a dividend of 40 million shekels.
The company's revenues in the quarter increased by 13% as a result of the opening of new branches and an increase of approximately 3% in same-store sales, amounting to NIS 253 million. In the first half of the year, sales in Max Stock's identity stores decreased by 4%.
Passover, which fell this year in the second quarter, increased the average basket in the 32 company-owned stores by 8.4% and in the 23 franchised stores by 6%, compared to the same period. Max Stock has 55 stores and at the beginning of the year it opened three new stores in Sderot, Nahariya and Nof HaGilil and in addition changed locations and increased areas in two stores in Rashtrapati and Dimona. During the year the company is expected to open a branch in Kfar Saba with an area of ​​5800 square meters and signed contracts to open new stores in Barot Yitzhak (3300 square meters) and in Mishor Adumim (2000 square meters) which are expected to open in the first quarter of 2023.
The timing of Passover helped the company improve its gross profit by 16% to 99 million shekels and its share of sales rose to 39.3% compared to 83.3% in the corresponding quarter of 2021. At the same time, sales and marketing expenses jumped by 29% to 61 million NIS as a result of an increase in the wages of employees at the company's headquarters, marketing expenses, an increase in property tax payments and wages of employees in the new branches.
An increase in operating expenses and depreciation expenses hurt Max Stock's operating profit, which fell by 18% to NIS 25 million and had a negative impact on the bottom line. The net profit for the shareholders fell by 24% to NIS 11 million.
During the Corona period, the company ordered a large amount of inventory for fear of delays in the supply chain, and due to stocking up on large volumes of inventory, the company reduced the amount of inventory ordered from China in the current quarter. As a result, the net cash flow increased from NIS 10 million in the corresponding quarter to NIS 56 million in the current quarter.
Meanwhile, the chain of discount products owned by Keren Apex and Uri Max announced an expansion to Europe during this year. The company signed an agreement with its local partner in Portugal, the Fortera Group - Fortera Properties LDA, to establish a chain of Max Stock stores in Spain and Portugal.
The parties will establish a joint company under the control of Max Stock which will hold 75% of the ownership and Portera 25%. The first stores will be opened in Portugal and then the parties will decide whether to expand the activity to Spain. Max will be entitled to appoint most of the directors in the joint company as well as the company's CEO. Portera will provide the joint company with management support, including negotiation of commercial agreements on behalf of the joint company, legal and regulatory aspects, strategy, tax and accounting services.
The initial financing required for the transaction for the establishment, maintenance and operation of the stores is estimated at 5 million euros, all of which will actually be paid by Max Stock. The discount chain's share in the financing will be 87.5% and Portera's share 12.5%, but Max Stock will provide Portera with a loan in the amount of Portera's share in order to pay the initial financing for the joint company. After that and according to the development of the activity, the joint company will apply for financing from external sources.
The retail market in Portugal, in non-food products, and in the areas in which Max Stock operates is estimated at approximately 12 billion euros. It is estimated that the discount stores make up between 15%-18% of the total market in Portugal (food and non-food consumer products), a relatively low rate compared to the European average, which, in Max Stock's opinion, enables growth and growth.