Max Stock Limited: Q3 2024 Results Show Strong Growth and Profitability

Max Stock Limited (TASE: MAXO) has reported its financial results for the third quarter and nine months ended September 30, 2024, showcasing strong growth and profitability. The company's revenue increased by 18.6% to ILS 373.1 million, driven by a combination of new branch openings and a 9.2% increase in comparable store sales. Gross margin stood at 41.3%, with adjusted net income attributable to shareholders increasing by 34.8% to ILS 31.3 million.



The company's expansion strategy played a significant role in its revenue growth. The opening of new branches added approximately 6,000 net square meters of selling space, contributing to the 18.6% increase in revenue. This expansion not only increased the company's physical presence but also led to a 9.2% increase in comparable store sales, primarily due to higher store traffic and conversion rates.

Max Stock Limited's comparable store sales increases were a key factor in its revenue growth. To mitigate the impact of holiday timing shifts, the company neutralized the timing of holidays by calculating comparable store sales for July-October 2024, which resulted in a 10.9% increase. This strategic approach helped the company maintain consistent sales performance despite the holiday shift.



The company's distribution facility consolidation led to temporarily higher costs, resulting in a 60-basis point decline in gross margin compared to the previous year. However, Max Stock Limited employed strategies such as operating leverage to manage these costs effectively. This operating leverage resulted in a 120 basis point decrease in selling, general, and administrative expenses as a percentage of sales, from 27.8% in Q3 2023 to 26.6% in Q3 2024. Despite higher marketing expenses, the company's revenue grew by 18.6% year-over-year, indicating that strategic investments in expansion and marketing are paying off.

Max Stock Limited's branch expansion and increased marketing expenses contributed to a decrease in selling, general, and administrative expenses as a percentage of sales. This operating leverage resulted from the company's ability to generate more revenue per unit of SG&A expenses, driven by successful new store openings and a 9.2% increase in comparable store sales. Despite higher marketing expenses, the company's revenue grew by 18.6% year-over-year, indicating that strategic investments in expansion and marketing are paying off.

In conclusion, Max Stock Limited's Q3 2024 results demonstrate strong growth and profitability, driven by a combination of factors such as new branch openings, comparable store sales increases, and effective cost management strategies. The company's ability to adapt and maintain profitability during the distribution facility consolidation process highlights its resilience and commitment to long-term growth. As Max Stock Limited continues to expand and invest in its value-oriented offerings, investors can remain optimistic about the company's growth prospects.