Israeli retail chain Blue Square has announced a 48.6% increase in 2005 annual net income, which rose to NIS90.8m (US19.7m), in a year when the company invested in the opening of seven new outlets.

Blue Square attributed its higher income to improved non-food sales, which benefited from a collaboration with Kfar Hashaashuim, decreased competition following the collapse of Clubmart in the third quarter, and successful brand consolidation and marketing initiatives. Same store sales for 2005 increased by 1.7% in the year.

The company's 2005 revenue was up 8% triggering a 6.8% rise in gross profits to NIS1.5m, from NIS1.4m in 2004. Gross margins for FY 2005 decreased to 25.9% compared to 26.2% in 2004 due to an increase in the proportion of discount sales, strong competition and an increase in discounts associated with the redemption of gift certificates during holiday seasons. These negatives were partially offset by better terms from suppliers and better pricing policies, the company said.

EBITDA for 2005 was NIS360m, an increase of 7.5% compared with NIS335m in 2004. Operating income for 2005 increased by 14.5% to NIS229m, reflecting the increased revenues and gross profit for the period.

Following the release of its financial results, Blue Square's board of directors declared a cash dividend of NIS1.28 per share.