Israeli supermarket operator Blue Square reported a drop in profits in the first quarter as its supermarket division suffered a reduction in sales and increased competition.
In the three months to the end of March, net profit slumped 92.6% to NIS2.8m (US$722.3m), while operating profit slid 61.2% to NIS38.1m.
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Blue Square blamed the declines on increasing competition in the supermarkets segment, a decrease in marketing margin from its the commercial and fuelling sites and an increase in SG&A expenses.
Group sales fell 5.6% to NIS3.18bn, which the company said was due to a 0.6% drop in sales in its supermarket division to NIS1.63bn.
Same-store sales for the unit dropped 2.6%, while operating profit slid 65.3% to NIS49.6m.
The decrease in same-store sales was partially offset by the opening of nine branches from the beginning of the first quarter.
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By GlobalData“This quarter was characterised by continued increased competition and accelerated opening of new commercial areas. Actions that were taken in the first quarter, by way of price reductions, resulted in decrease of profitability,” said CEO Zeev Vurembrand.
Click here to view the full earnings release.
