Max Stock reported its second quarter today, 11 August 2026.
Errors or inaccuracies are possible. Spotted something that looks wrong? Write to me and I will correct it.
What Max Stock Does
Max Stock is a discount retail chain - large stores selling homeware, kitchen goods, cleaning products, toys and stationery at low prices.
The business model rests on three things: buying in large volume at low cost, a rotating product mix that drives fast turnover, and large stores outside city centres where rent is relatively cheap.
And what you measure in a chain like this is not just how much was sold - it is how much stays behind from each shekel of sales. Which makes gross margin the decisive line.
The Quarter
| NIS thousands | The quarter | A year ago | Change |
|---|---|---|---|
| Revenue from sales | 378,994 | 336,288 | +12.7% |
| Cost of sales | 200,530 | 188,982 | +6.1% |
| Gross profit | 178,464 · 47.1% | 147,306 · 43.8% | +21.2% |
| Selling and marketing | 86,430 | 75,654 | +14.2% |
| General and administrative | 15,104 | 14,855 | +1.7% |
| Operating profit | 76,930 · 20.3% | 56,772 · 16.9% | +35.5% |
| Financing expenses | 35,586 | 24,980 | +42.5% |
| Pre-tax profit | 45,921 · 12.1% | 35,336 · 10.5% | +30.0% |
| Taxes on income | 10,008 | 7,805 | |
| Net profit | 35,913 · 9.5% | 27,531 · 8.2% | +30.5% |
| Attributable to shareholders | 32,598 | 24,021 | +35.7% |
| Attributable to non-controlling interests | 3,315 | 3,510 |
The Strong Part, and It Is Very Strong
Revenue rose 12.7%. Cost of sales rose only 6.1%.
That is the entire operating story in two lines. When sales grow at nearly twice the pace of costs, gross margin has to widen - and it did: from 43.8% to 47.1%, an improvement of 3.3 percentage points.
In discount retail that is a large move. A chain selling at low prices lives on thin margins, and every percentage point falls almost entirely to the bottom line.
And what reinforces it further: general and administrative expenses rose just 1.7% while revenue rose 12.7%. The chain grew without growing its head office - which is exactly what should happen when the model works.
The result: operating profit of NIS 76.9 million, up 35.5%, with the operating margin rising from 16.9% to 20.3%.
And Then One Line Changes the Picture
Financing expenses rose 42.5%, to NIS 35.6 million.
For scale: operating profit was NIS 76.9 million. Pre-tax profit was NIS 45.9 million.
So roughly NIS 31 million - more than a third of operating profit - disappeared between those two lines.
Which explains the gap in pace: operating profit jumped 35.5%, but pre-tax profit rose only 30.0%. Financing ate five and a half percentage points of the growth.
And what that actually is, in a retail chain: most of that sum is not interest on loans in the ordinary sense, but financing expense on lease liabilities. Under current accounting, a store lease is recorded as a liability on the balance sheet, and the notional interest on it is charged as a financing expense.
Which means: the more stores the chain opens, the larger this line grows - without a single loan being taken. It is a built-in cost of growth, not a one-off event.
Balance Sheet and Cash Flow
Operating cash flow in the quarter: NIS 54.6 million - above net profit of NIS 35.9 million, which is reasonable in a business with meaningful depreciation.
On the balance sheet at 30 June 2026:
| NIS thousands | |
|---|---|
| Total assets | 1,388,684 |
| of which current assets | 526,149 |
| Total liabilities | 1,102,265 |
| of which current | 369,944 |
| Equity | 286,419 |
| Attributable to shareholders | 280,166 |
Equity is roughly 20.6% of total assets. In a retailer operating leased stores, a large share of liabilities is lease obligation rather than classic financial debt - so that ratio looks tighter than it really is.
Basic and diluted earnings per share: NIS 0.23.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
This is a report I enjoy reading, because it separates clearly what management controls from what it does not.
What management controls worked very well. A gross margin rising 3.3 percentage points in a discount chain is not a cosmetic move - it is either better buying, or a more profitable product mix, or both. And in retail, improving gross margin is the hardest thing to achieve, because it fights constant price competition.
And what impresses me even more is the G&A line: up 1.7% against revenue up 12.7%. That means the chain is adding sales without adding head office - precisely the leverage that turns a decent retailer into a good one.
What management controls less is the financing line, and that is what I am flagging.
NIS 31 million vanishing between operating profit and pre-tax profit, in a single quarter, is a lot. And it grew 42.5% in a year - faster than any other line in the report.
And I would not call that a problem so much as a structure. A chain that expands signs new leases, and each one increases the lease liability and the notional interest on it. So the more successful the chain is at opening stores, the larger this line becomes. It is not a penalty for failure - it is the price of success.
What does need watching is the ratio between the two. As long as operating profit grows faster than financing expenses, the growth pays. This quarter that almost happened, but not quite: operating up 35.5%, financing up 42.5%. Financing is running faster.
And if that gap persists for a few more quarters, you reach a state where the chain opens stores, grows sales, improves margin - and shareholder profit still marks time. That is the number I will read first next quarter.
