Late last night, Alon Blue Square Israel released the third quarter financial statements of supermarket chain Mega, which is struggling for its existence. The chain's operating loss for the third quarter was NIS 154 million, which compares with a loss of NIS 30 million in the third quarter of 2014, a statistic that brings home its difficulties. The company's financial statements have a going concern qualification appended to them.
Mega made a net loss on regular activities of NIS 68 million in the third quarter of 2015, compared with a loss of NIS 62 million in the corresponding quarter. Its revenue plummeted by 37% to NIS 942 million. Same store sales fell by nearly 16%.
Mega succeeded in reducing its expenses to NIS 278 million from NIS 458 million in the corresponding quarter, but on the other hand the drop in sales revenue cut gross profit almost in half, to NIS 210 million. EBITDA (earnings before tax, interest, depreciation and amortization) from continuing stores remained negative, at a loss of NIS 41 million, compared with a loss of NIS 31 million in the corresponding quarter.
According to the quarterly report, Mega closed all 32 stores that it planned to close under its recovery plan, and reduced its headcount "substantially". It currently employs 4,600 people and operates 148 stores. "The company's management decided to cease the loss-making discount store activity and to sell You branches, and to focus on the Mega in Town chain which represents the company's core business," the report states.
Mega CEO Raviv Brookmayer says, "In recent weeks there has been a decline in sales mainly because of shortages at the branches. The demand by some suppliers to receive guarantees from the parent company, Alon Blue Square, and the negative publicity about disputes between the parent company and its creditors, have in recent weeks led to a change in suppliers' credit terms and a significant slowdown in the supply of goods from Mega's suppliers to its stores. This slowdown led to a drop in sales, and represented one of the most material causes of the deviation from Mega's recovery plan. We are acting determinedly vis-a-vis the suppliers to ensure availability of goods on the shelves and the restoration of sales to the required level."
Published by Globes [online], Israel business news - www.globes-online.com - on December 1, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015