Electra Consumer Products published its second-quarter report. The road from NIS 541 million of gross profit to NIS 30 million of net profit is the whole story.
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The Quarter
| NIS millions | The quarter | Share of revenue |
|---|---|---|
| Revenue | 1,823 | |
| Gross profit | 541 | 29.7% |
| Operating profit | 89 | 4.9% |
| Pre-tax profit | 36 | 2.0% |
| Net profit | 30 | 1.6% |
| Attributable to shareholders | 27 | |
| Non-controlling interests | 3 | |
| Basic earnings per share | NIS 1.19 | |
| Balance sheet total | 7,836 | |
| Shareholders' equity | 1,099 |
The Journey Down, in Two Stages
This is a report in which profit shrinks twice, each time for a different reason.
Stage one: from 29.7% to 4.9%
From NIS 541 million of gross profit, NIS 89 million of operating profit was left. NIS 452 million was taken out.
That is, only about 16% of the gross margin survives to the operating line.
And that is unusually low survival, even for retail.
| Q2 2026 | Gross margin | Operating margin | Survival |
|---|---|---|---|
| Castro | 63.6% | 17.4% | 27% |
| Yochananof | 22.0% | 7.0% | 32% |
| Carasso Motors | 17.1% | 5.7% | 33% |
| Electra Consumer | 29.7% | 4.9% | 16% |
And the explanation is the structure of the business. Selling electrical goods is not only selling - it involves large showrooms, logistics for heavy items, installation in the customer's home, and service and warranty over years.
All of those are costs sitting below the gross line, and they do not fall in proportion to sales.
The meaning: a gross margin of almost 30% sounds comfortable, and it erodes on the way down more than at any other retailer we read this week.
And stage two: financing took 59.6%
From NIS 89 million of operating profit, NIS 36 million was left before tax. NIS 53 million was taken out.
And the explanation is in the balance sheet: NIS 7,836 million of assets against equity of NIS 1,099 million - a ratio of 7.1 to one.
In retail, the bulk of this leverage is leases. The leases standard presents every store rental contract as a right-of-use asset and, in parallel, as a liability, and the interest on it falls below the operating line.
So a chain with a lot of physical space will look leveraged even if it has not borrowed a shekel from a bank.
And the Tax: 16.7%
NIS 36 million before tax and NIS 30 million after - that is, tax of NIS 6 million, an effective rate of 16.7%.
That is below Israel's corporate rate of 23%.
The structured filing does not detail the tax reconciliation, so I do not assert its source. What can be said: had the rate been 23%, net profit would have been about NIS 27.7 million rather than 30 - so the benefit contributed about NIS 2.3 million to the quarter.
And in a business whose net margin is 1.6% of turnover, that is not negligible.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
What I take from this report is how thin the margin is in electrical goods retail.
Of every hundred shekels that came in, 1.6 shekels reached the bottom line - and 1.5 of those went to shareholders. And on turnover of NIS 1.8 billion in a quarter, that is NIS 30 million.
And what that means in practice is that this business is extremely sensitive: a one-percentage-point erosion in the gross margin wipes out about two thirds of net profit. And a percentage point of gross margin is a matter of competition, of the exchange rate or of product mix - things outside the company's control.
And what particularly interests me is the 16%. Electra Consumer starts with a gross margin almost double Yochananof's and arrives at the operating line with less than it. The entire gap is in the cost of running the network.
So the number I will follow is not the gross margin but margin survival - how much of it makes it down. Today that is 16%. That is the ratio that separates a chain growing efficiently from a chain growing in costs.
And what I would look for in the full accounts is a separation between retail and service and installation. Selling an appliance and servicing it are two businesses with entirely different margins, and they are reported here as one line.
(It is important to stress: this is my personal opinion only, and nothing herein constitutes a recommendation to take any action.)
