Shilav, Israel's largest baby products chain, controlled by the Oren family, has been sold to former Hapoel Petah Tikva soccer co-owner Ronen Eldad at a company value of NIS 100-120 million. According to the company's announcement, Shilav CEO Anat Levin will continue in her job. Completion of the deal is likely to take place within a month.
"Globes" reported 18 months ago that Shilav had begun considering the sale of the chain, after a previous attempt failed.
Shilav, founded in 1974 by husband and wife Isaac and Shoshi Oren, currently has 70 outlets. The chain sells birth packages that include furniture for babies' rooms, baby carriages, and supplementary products. The chain's two main categories are fashions for babies and children up to seven years old and toys for babies and toddlers.
The Shilav owners founded the birth packages sector, and the chain operated almost exclusively in this market for many years. Competitors arose over the years, forcing Shilav to reconsider its high prices and provide competitive solutions. Like other retail chains in recent years, Shilav has been affected by growing competition from online stores.
Shilav's most prominent conventional competitor is Motsesim, which was founded 25 later than Shilav. The new chain symbolically opened an outlet in the Ayalon Mall in Ramat Gan in early 2014 in place of Shilav's flagship branch, which closed down.
Motsesim owners Asaf and Gil Cohen told "Globes", "A large part of our success is thanks to Shilav. They aimed at the upmarket, which enabled us to take a large share."
In early 2010, the Orens tried to sell the chain. They negotiated with a number of retail concerns, including Castro Model Ltd. (TASE: CAST); George Horesh, the importer of Toyota cars to Israel and H&M franchise holder; Elbit Trade and Retail; and B. Gaon Holdings Ltd. (TASE: GAON). This was the first time that the chain's financial performance had been revealed. Its sales turnover totaled NIS 218 million in 2009, and its EBITDA was NIS 21 million. Shilav stated at the time that it expected to finish 2010 with sales of NIS 230 million and a NIS 25 million EBITDA.
The negotiations failed when the Orens did not receive the price they were asking for the chain - NIS 175 million. The owners notified the workers in August 2010 that they had decided not to sell.
In the summer of 2013, Shilav took an important step indicating a change in the company's business strategy by declaring the opening of a babies' rooms department and the sale of furniture products not belonging to the chain. With the announcement, the chain launched a furniture center in Airport City, while making a commitment to sell babies' rooms at the lowest price in Israel.
In 2014, the Orens announced the sale of the toy manufacturer and developer Tiny Love to Canadian toy company Dorel.
The baby products sector in Israeli had a NIS 1.5 billion turnover as of 2014, not including baby clothes stores or food and pharma products for babies sold in the pharma chains and supermarkets, according to a sector survey conducted by Dun & Bradstreet. The survey found that there were 300 stores in the sector, which was dominated by Shilav in the number of outlets.
The survey emphasized that the prices of baby products in Israel were substantially higher than in Europe and the US, "due to the many parts in the supply chain" (most of the surplus margin is divided among the importers and marketers, in addition to other costs for taxes and obtaining Israeli standards for products from the Standards Institution of Israel).
The report also notes that the level of gross profit among the major chains was 30% for most products, and even as much as 40-45% for some products, for example baby carriages and safety seats (a less competitive category). According to Dun & Bradstreet, despite the acceleration of online purchases, online sales of baby products were fairly low, given the need to feel and see the products before buying them. Orders of baby products from international websites consist mainly of clothing and toys.
Competition from overseas websites, headed by Next, has intensified in recent years. It is easy for parents to buy clothing for babies online, without paying customs duties and VAT, because there is no need to measure the clothes, which are bought in sizes according to age. The low-cost chains have also recently expanded their activity to the babies market, and a baby department was launched by the Max Stock chain in recent months.
Published by Globes [online], Israel Business News - www.globes-online.com - on December 31, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017