Rustic Bakery Reports Higher Profit Despite Sales Dip
Translated & summarized from Calcalist by baba
Rustic Bakery, owner of the Pillsbury brand, reported a 6.1% increase in net profit to NIS 12.7 million for the third quarter of 2026, despite a 5.4% drop in sales to NIS 97.7 million. The company attributed the profit rise to improved gross profit margins and efficiency measures. Rustic is also expanding its factory in Jerusalem, with the project expected to finish in the second half of 2028.
The story in 5 lines · by baba
- Rustic Bakery's Q3 2026 net profit rose 6.1% to NIS 12.7 million, while sales fell 5.4% to NIS 97.7 million.
- The company's gross profit margin increased to 43.5% due to efficiency and lower logistics costs.
- Sales were impacted by holiday timing and reduced customer traffic following a military operation.
- Rustic Bakery is expanding its Jerusalem factory, a project estimated at NIS 100 million.
- The factory expansion is projected to be completed in the second half of 2028.
Rustic Bakery, the owner of the Pillsbury brand and importer of Nature's Valley and Hagen-Dazs, concluded the third quarter of 2026 with a net profit increase of 6.1%, reaching NIS 12.7 million. This rise occurred despite a 5.4% decrease in sales, which totaled NIS 97.7 million. For the first nine months of the year, Rustic reported a 21.4% increase in net profit to NIS 36.2 million, with sales remaining stagnant at NIS 292.3 million.
The improved profit is attributed to a rise in gross profit margin to 43.5% of sales, up from 41.2% in the same period last year, and an increase in operating profit margin to 14.6% from 14.1%. The company explained the third-quarter sales decline by citing increased international travel compared to the previous year, which was near the end of the "With Us All the Way" operation, and a resulting drop in customer traffic. The timing of the Sukkot holiday, which fell in the third quarter this year but the fourth quarter last year, also impacted sales.
Despite lower sales, the company maintained its gross profit at approximately NIS 43 million. This led to an improved gross profit margin of 44% of sales, compared to 42.3% in the third quarter of the previous year. The improvement was also driven by production efficiency measures and reduced logistics costs. The company, which raised NIS 200 million in June at a pre-money valuation of NIS 800 million, saw a 17% increase in general and administrative expenses to NIS 6.3 million in the quarter, primarily due to professional services related to its public company status.
Sales and marketing expenses rose by 1.6% to NIS 22.2 million, mainly due to the expansion of the company's franchise network, leading to increased salary expenses from new bakery corners and expanded retail operations in the latter half of 2025. Consequently, operating profit decreased by 11.1% to NIS 14.1 million, and operating profit margin declined to 14.4% from 15.4% in the prior year's quarter.
The company benefited from financing income in the quarter, including interest on deposits from IPO funds, credit repayments from banks, and profits from a subsidiary. Combined with lower tax expenses, this contributed to the rise in net profit. Prior to its IPO, Rustic had signed a memorandum of understanding to acquire a 70% stake in a private company specializing in special dough production for NIS 100 million, but the deal did not materialize.
Rustic, through its subsidiary Shegal, holds land rights in Jerusalem's Atarot industrial zone where its factory is located. The company is currently expanding the factory and constructing an additional industrial building, expected to be completed by the second half of 2028 at a cost of approximately NIS 100 million. Excavation and shoring work began in January 2025 and concluded in February, with building permits obtained two months ago and construction already underway.