Despite several attempts to bring about a turnaround in 2017 and early 2018, Cofix Group (TASE: CFX), which operates a chain of cut-price cafés and supermarkets, reported weak first quarter results at the end of last week.
Cofix posted an operating loss of NIS 5.4 million for the first quarter of 2018, which compares with an operating profit of NIS 810,000 in the corresponding quarter of 2017. The bottom line was a net loss of NIS 3.7 million for the quarter, which compares with a net profit of NIS 814,000 in the corresponding quarter.
Via its Urban Cofix subsidiary, Cofix operates 126 cafés around Israel, 107 of them through franchise agreements. These numbers are similar to the numbers at the end of 2017. In addition, Cofix operates 30 stores in the Super Cofix chain.
Revenue in the first quarter of 2018 totaled NIS 74.7 million, 4.4% less than in the corresponding quarter of 2017. Revenue for the stores chain was NIS 52 million, 4% higher than in the corresponding quarter, whereas revenue from the cafés shrank 19% to NIS 23.5 million.
The stores made an operating loss of NIS 1.6 million in the first quarter this year, which compares with a loss of NIS 1 million in the corresponding quarter. The cafés switched to an operating loss of NIS 3.8 million from an operating profit of NIS 2 million in the corresponding quarter.
Comprehensive restructuring
At the same time as it released its financials, Cofix Group announced a comprehensive streamlining program meant to restore it to profitability. Cofix Group is controlled by Avi Katz (23.5%), the Green Lantern fund, and Rami Levy, who recently bought a 20% stake for nearly NIS 19 million in a shares deal.
The company plans to cut its head office expenses, and thereby save NIS 350,000 in the second quarter and NIS 900,000 in subsequent quarters. Cofix Group sees a NIS 2.1 million total reduction in head office costs over the year.
Cofix plans to replace the management of its Yavneh factory and to implement streamlining measures while it introduces a new range of products.
Last week, a seizure order imposed by the court at the request of Cofix's plastic products supplier Impofix was removed. Cofix was required to deposit a bank guarantee of NIS 1.7 million instead.
Published by Globes [online], Israel business news - www.globes-online.com - on June 3, 2018
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