Israeli Food Chains Boost Sales, Except For Shufersal
Most major Israeli food retailers saw revenue and profit growth in the first half of 2026, with combined revenues reaching NIS 18 billion, a 3.7% increase year-over-year. This positive trend, however, was overshadowed by the disappointing financial results reported by Shufersal, the country's largest food chain. Shufersal reported a nearly 2% decrease in revenue, totaling approximately NIS 7 billion, and a significant drop in same-store sales and profits, causing its stock to plummet over 10% following the announcement.
While the overall sector experienced a slight dip in gross profit margin to 26.9% and operating profit margin remained stable at 6%, Shufersal's performance dragged down aggregate figures. Analysts from IBI noted that the second quarter showed weakness across most chains, excluding Tiv Ta'am, attributing this to a challenging comparison base due to the timing of Passover and increased wartime demand in the previous year. Despite investments in technology and automation, rising input and labor costs are impacting profitability across the sector.
Shufersal's market share has also declined, falling from 50% of the combined revenue of five public chains in 2023 to 44% in the first half of 2026. The company attributes its struggles to ongoing store renovations, including conversions to its "Univer" discount format, reduced operating hours, and the closure of unprofitable branches. Despite these challenges, Shufersal maintained a strong gross profit margin of 30%, though its operating profit margin decreased.
In contrast, other chains like Tiv Ta'am reported significant growth, with a 12% increase in revenue and improved profit margins, partly due to the integration of "Mizrach U'Ma'arav," an importer it acquired. Yohananoof also showed strong revenue growth, while Rami Levy improved its operating profitability. Victory, however, experienced a sharp stock decline, partly due to an 8% decrease in same-store sales when excluding its humanitarian aid sales to Gaza, which amounted to NIS 110 million in the first half.
Looking ahead, analysts predict a strong September due to the timing of the High Holidays, which is expected to offset a potential slowdown in July and August caused by increased international travel. This holiday season is anticipated to boost domestic consumption and provide a favorable trading period for most food retailers.
