Food Price Increases Boost Blue Square: Israel Overnight

Alon Blue Square Israel Ltd., the supermarket retailer that led gains among Israeli U.S.-traded stocks in April, is rallying on prospects higher food prices will stoke revenue growth.

Shares of Blue Square advanced 0.5 percent to $3.76 yesterday in New York, extending a 27 percent surge in the month to trade at the highest level in a year over the Bloomberg Israel-US Equity Index. The gauge of the 25 largest New York-traded Israeli companies fell 1 percent in April, as Radware Ltd. posted the biggest monthly plunge since July on slowing sales. Israel’s benchmark TA-25 Index slipped 0.2 percent to 1,204.14 in Tel Aviv today.

Blue Square, which owns the Mega, Shefa Shuk and Eden Nature store chains, joined other Israeli grocers in raising prices by as much as 8 percent in the first quarter as protests over rising living costs diminished, according to Israel Brokerage & Investments Ltd. IBI, which recommends buying the stock, projects a 30 percent rally in the next 12 months for the Rosh Ha’Ayin-based company, whose supermarket sales accounted for 64 percent of operational profit at the end of 2012.

“Since the protests dissipated, retailers have had some scope to roll over the price increases onto consumers,” Zach Herzog, head of international sales at Psagot Investment House Ltd. in Tel Aviv. “People are expecting the 2013 numbers will stack up favorably.”

Shares of Blue Square in Tel Aviv have nearly doubled after hitting an all-time low on Sept. 11. Its competitors Shufersal Ltd. and Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. have gained more than 41 percent during the period.

Lower Prices

Demonstrations began in June of 2011 in Israel as hundreds of thousands of protesters called for more affordable housing and lower prices for food and other consumer products. In response to the protests, Prime Minister Benjamin Netanyahu appointed a committee led by economist Manuel Trajtenberg, which recommended a series of measures to boost competition.

“During the social protests in Israel, there was no possibility to raise prices for the consumer,” Dorin Palas, Tel Aviv-based analyst at IBI, said by telephone yesterday. In the first quarter “prices went up, which will be an improvement for sales in the retail sector.”

Fourth-quarter revenue at Blue Square rose 3 percent to 3.8 billion shekels, $1.07 billion dollars, the company said in a statement on March 22.

Annual inflation slowed to 1.3 percent in March from 1.5 percent the previous month, the Central Bureau of Statistics said April 15. That level is the lowest since June and below the 1.4 percent median estimate of 13 analysts surveyed by Bloomberg.

Shares Gain

Blue Square rose 0.5 percent to $3.76, the highest price in a year. The shares gained 0.4 percent in Tel Aviv to 13.48 shekels, or $3.76. The Israel-US Index added 0.4 percent to 89.48.

Nova Measuring Instruments Ltd. led the increase on the Israel-US gauge, rising 4 percent, the most since Feb. 20, to $9.17. Shares in Tel Aviv gained 3.1 percent to 33.02 shekels, or $9.23 today. The company reported first quarter sales of $27.4 million, a 24 percent jump from a year earlier, after the close of the U.S. markets. The average estimate of two analysts surveyed by Bloomberg was $26.1 million.

Caesarstone Sdot Yam Ltd. slipped the most on the index, falling 1.9 percent to $23.46. The maker of quartz countertops slumped 11 percent in April.

Compugen Ltd., which uses computer programs to discover proteins that may have the ability to treat diseases, rallied 4.4 percent to $5.99, the highest since March 12. The company plans to announce a pharmaceutical partnership this year, which will generate more revenue, Chief Executive Officer Anat Cohen-Dayag said in an interview at Bloomberg headquarters in New York yesterday. Shares jumped 3.9 percent in Tel Aviv today to 21.97 shekels, or $6.14.

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