Rami Levy earned NIS 34 million in the past quarter, a 42% decrease compared to the corresponding quarter in 2021

The increase in inflation, losses in the capital market, and a further deterioration in Kofix's situation eroded the profits of the Rami Levy company in the second quarter of 2022. Rami Levy earned NIS 34 million in the past quarter, a 42% decrease compared to the corresponding quarter in 2021. Rami Levy's revenues increased by 9% in the second quarter of 2022 compared to the corresponding quarter in 2021 and amounted to NIS 1.7 billion.
The increase in the company's revenues is due to a 3.7% growth in sales in the food retail sector to a level of NIS 1.5 billion. This sector operates 56 branches, three of which are franchised, with a sales area of ​​100,000 square meters. The increase in food retail sales resulted from a 2.9% increase in sales of identical stores, that is, stores that operated in the same format, both in the second quarter of 2022 and in the corresponding quarter in 2021; from the addition of one store and a sales area of ​​1,500 square meters; And from a 40% growth in wholesale sales to containers, institutions and businesses to a level of NIS 46 million in the past quarter.
Other factors for the growth in Rami Levy Group's sales will be a 40% increase in the sales of the other sector, which includes Rami Levy's communications company and the pharmacy chain Good Pharm, which operates 47 branches - to a level of NIS 196 million. Good Pharm Wholesale, which deals in the sale of corona test kits in accordance with the Ministry of Health's tender and in the distribution of perfumes and toiletries and cleaning products - grew by 360% in the second quarter of 2022 compared to the corresponding quarter in 2021 to a level of NIS 52 million. However, there was a dramatic drop of 82% compared to the first quarter of 2022, when the company benefited from the surge in demand for corona test kits.
Rami Levy's gross profit grew by only 5% in the second quarter of 2022 compared to the corresponding period in 2021, i.e. about half the growth rate in sales, and amounted to NIS 401 million, which is 23.1% of the turnover compared to 24.1% of the corresponding turnover in 2021. Barmi Levy explains the erosion in gross profitability due to the increase in sales prices by the suppliers, which was partially absorbed by the company and the sales promotions leading up to Passover, during which discounts were given to customers. However, Barmi Levy confirms that they raised the prices of the products sold under private label upon completion of their introduction process. Private label sales rose to 21.9% of the chain's sales turnover compared to 18.6% of turnover in the corresponding quarter in 2021.
Rami Levy's operating profit decreased by 18% in the second quarter of 2022 compared to the corresponding quarter in 2021 and amounted to NIS 74 million. The operating profit of the food retail sector fell by 25% in the past quarter compared to the corresponding quarter in 2021 and reached NIS 58 million, which is 3.8% of the turnover compared to 5.3% of the turnover in the corresponding quarter in 2021. The sharp drop in operating profitability is due to the erosion of a percentage point in gross profitability, a 6.2% increase in salary expenses and a 4.1% increase in rents - as a result of the increase in the price index to which the leases and wages are linked, and the lack of manpower.
The erosion in profit and gross profitability of the food retail sector was partially compensated by a 16% increase in the operating profit of the other sector to NIS 16 million in the past quarter. The others sector includes Good Pharm, the communications company and unfortunately also the group's failed investment: Kofix, which continued to deteriorate in the past quarter as well. The improvement in other segment profits was due to an increase in the profits of Rami Levy Communications thanks to the increase in the number of subscribers and increased sales of telephones and the continued increase in the profits of Good Pharm. The growth in other sector profits occurred despite Kofix's transition to an operating loss of NIS 1.3 million in the past quarter, compared to an operating profit of NIS 2 million in the corresponding quarter in 2021 - mainly due to the considerable deterioration in the condition of Super-Kofix, which operates 37 branches.
The chain, which is mainly active in Gush Dan, moved to an operating loss of NIS 86,000 in the second quarter of 2022 compared to an operating profit of NIS 1.9 million in the corresponding quarter in 2021 after suffering an 11% collapse in same-store sales as a result of an increase in sales space in Tel Aviv and a considerable worsening of the competition. On the other hand, it suffered a sharp increase of 10% in operating expenses, such as rent, wages, fuel and property taxes. Barmi Levy points out that three stores were transferred to franchises after the company came to the conclusion that it does not have an advantage in operating stores with a small sales area.
The coffee shop sector, which operates 70 branches, eight of which are self-operated, suffered an operating loss of NIS 768,000 in the past quarter compared to breaking even in the corresponding quarter in 2021, and Barmi Levy admits after many years that they are looking for a solution to the failed operation. Kofix ended the past quarter with a loss of NIS 4.5 million compared to the balance in the corresponding quarter in 2021. This is as a result of an additional provision of 1.8 for impairment and a loan of 2.5 million dollars given to the held company Cofix Global (42%), which operates 290 branches - 250 of them in Russia. Rami Levy's net profit line suffered another blow of NIS 10 million as a result of a loss on a securities portfolio in the second quarter - which was one of the most difficult in the capital market.