Electra Consumer Products' food division, the Israeli franchisee of the 7-Eleven convenience store chain and Carrefour retail and wholesaling chain, reported a third-quarter deficit of NIS 7 million ($1.9 million) in 2023. This marks an improvement from the $13.8 million shortfall in the same period last year.
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Also, it became apparent from the reports that 7-Eleven's launch in Israel did not meet expectations: the food division's losses included a set aside of $1.3 million for the closure of four Tel Aviv outlets that had opened less than a year prior (one of the branches on Yefet Street in Jaffa has already closed, another on Aliyah Street is set to close, with the fate of two others yet to be decided). This is on top of a NIS 3 million loss incurred by the convenience store chain from its regular operations.
Currently, 7-Eleven is running just seven branches, following unmet business projections and struggling to make a mark in the vibrant Israeli market. As things stand, Electra is exploring exit strategies from this venture, potentially through a merger with a comparable network or by selling it to Carrefour.
At the investor conference held today, Electra Consumer Product Ltd's CEO, Zvika Shwimmer, articulated in his presentation that the company's gross profit margin has seen an uptick from 24.5% to 29.5%. While this is a promising development, it's crucial to remember that the company is burdened with a debt approaching $136 million. This results in hefty financing expenses that adversely affect its overall performance and ongoing operations. In light of the present market conditions, the plan to list the chain on the stock exchange to amass capital is momentarily suspended.
As you may remember, Carrefour experienced a significant shakeup when Uri Kilstein, who was the chain's third CEO in a year, suddenly stepped down. Presently, the company is under the leadership of CEO Zvika Shwimmer, joined by the returning former CEO, Michael Lobowitz. The company is currently implementing an efficiency plan that involves cutting 200 positions (including 120 from the recently acquired and assimilated Quik delivery company). The goal is to decrease yearly expenditures by approximately $30.7 million.
The firm anticipates a substantial rise in fourth-quarter sales due to two primary factors: the aftermath of the war and the conversion of numerous Carrefour branches. During an investor meeting, Shwimmer disclosed that the chain registered unprecedented sales in October when the war erupted, with a surge of 71% attributable to increased consumer hoarding.