Tiv Taam: Sales shrunk in the quarter by 2.8% to NIS 399.5 million

A decrease in sales in the premium chain Tiv Taam. From the company's reports for the summary of the third quarter, it appears that the slowdown trend in the food market is recorded even when it comes to a food chain that is not in the discount sector. The company's sales shrank in the quarter by 2.8% to NIS 399.5 million and the net profit fell by 34.3% to NIS 12.5 million. The decrease was recorded in the retail arm, which operates 44 branches, despite the opening of 3 new branches since the beginning of the year, and its sales decreased by 4.3% to NIS 344.4 million.
The company explained the drop in chain sales mainly due to the timing of last year's Tishrei holidays (the Hebrew year) which fell in the third quarter, and this year also spilled over into the fourth quarter. Despite the decrease in sales and profit, Tiv Taam, controlled (46.6%) and managed by Hagi Shalom, announced a dividend of NIS 3.75 million, which is added to the NIS 14 million dividends it has distributed since the beginning of the year.
Tiv Taam's reports show that, unlike the chains struggling with suppliers who raise prices, the chain has raised prices in recent months, and these have helped it improve its gross profitability to 32.9% of sales, despite the contraction in activity.
An improvement in profitability is reflected in the increase in gross profitability to 32.6% of sales compared to 31.6% in the corresponding quarter last year, which the company explained in "updating prices and changing the product mix". But it was offset by the erosion of the gross profitability of the industrial arm of Tiv Taam, whose gross profitability eroded to 22.7% compared to 24.8% in the corresponding period last year.
The increase in the cost of inputs led to an increase in sales, marketing, management and general expenses to NIS 108.8 million, and their proportion of sales climbed to 27.2% compared to 25.2% in the corresponding quarter last year.
As a result, the company's operating profitability eroded to 5.7% of sales compared to 7.4% in the corresponding period last year. In the food chain, operating profitability eroded to 4.6% of sales compared to 6.3% in the third quarter of last year, while in the industrial arm operating profitability stood at 7.9% of sales compared to 9.3% in the corresponding quarter.
In the first 9 months of the year, Tiv Taam's sales fell by 2.3% to NIS 1.176 billion, and the gross profitability eroded to 32.9% compared to 33.1% of last year's sales. Operating profitability eroded to 6.4% of sales compared to 7.4%. Combined with an increase in expenses, the net profit in the 9 months decreased by 19.7% to NIS 43.9 million.