Insurance Giant Migdal Sells Shufersal Shares Amidst Retailer's Financial Woes

Migdal Insurance, controlled by Shlomo Eliyahu, has sold off a significant portion of its shares in the retail giant Shufersal, falling below the 5% ownership threshold and ceasing to be considered a 'party of interest.' This move follows Shufersal's recently released first-half financial reports, which revealed a substantial decline in the company's operational and financial metrics.

Migdal previously held a 6.2% stake in Shufersal, valued at approximately NIS 600 million, through its profit-sharing policies and mutual funds. Over the past three months, the insurance company divested shares worth about NIS 125 million, achieving an average selling price of roughly NIS 38 per share. This average price is about NIS 1.70 higher than the current market price, as Shufersal's stock has dropped approximately 12% in the last month.

The sell-off by Migdal occurs against the backdrop of Shufersal's weak performance. The company, now controlled by brothers Yossi and Shlomi Amir who also serve as co-CEOs, reported a 13.8% drop in net profit to NIS 299 million and a nearly 2% decrease in revenue, totaling NIS 7.1 billion. Sales at comparable stores saw a sharper decline of 2.7%, contrasting with competitors like Rami Levy and Yohananof, which experienced growth.

Furthermore, Shufersal's operating profitability has eroded to 6.3%. This downturn follows a period where the company had shown improved profitability due to efficiency measures and price increases. The recent sharp decline in Shufersal's stock price also puts its position in the TA-35 index at risk ahead of the upcoming index rebalancing. Despite the recent struggles, Shufersal's stock has seen a significant increase of about 133% over the past three years.