Israeli supermarket chain Clubmarket has returned to profitability after two years of losses, mainly due to severe cost-cutting in the face of competition from rivals Blue Square Co-Op and Super-Sol.

Clubmarket had run up accumulative operating losses of NIS118m (US$27.4m) for 2000 and 2001, but reported an operating profit for 2002 of NIS9m.

The chain, according to Haaretz, has closed a large number of its loss-making branches, converted many of its other branches to a cheaper format, and laid off almost one-third of the chain's employees.

Meanwhile, Super-Sol's management is planning a recovery strategy, calling for the closure of ten to 15 stores and a 5% reduction in staff, after posting its first-ever operating loss in the first quarter of this year. The report notes that Super-Sol may eventually consider the entry of a strategic foreign partner, "if the economic and political situations improve."