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MIRA
INFORM REPORT
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Report No. : |
512218 |
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Report Date : |
01.06.2018 |
IDENTIFICATION DETAILS
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Name : |
FOX-WIZEL LTD. |
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Formerly Known As : |
WIESEL TEXTILE MARKETING LTD. |
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Registered Office : |
P.O. Box 76 6
Hermon Street Airport City Park Airport City 7019900 |
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Country : |
Israel |
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Financials (as on) : |
31.03.2018 (Consolidated) |
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Year of Establishment : |
1990 |
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Legal Form : |
Public Limited Company |
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Line of Business : |
Subject is
engaged in Designers, importers, manufacturers (via subcontractors in South
East Asia), marketers, exporters and retailers of apparel and fashion
accessories under the brand name “Fox” under 4 categories ("Fox
Men", "Fox Women", "Fox Kids" and "Fox
Baby"), as well as “Fox Home” (household products). |
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No. of Employees : |
4,797 |
RATING & COMMENTS
(Mira Inform has adopted New Rating mechanism w.e.f. 23rd
January 2017)
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MIRA’s Rating : |
A |
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Credit Rating |
Explanation |
Rating Comments |
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A |
Acceptable Risk |
Business dealings permissible with
moderate risk of default |
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Status : |
Satisfactory |
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Payment Behaviour : |
No Complaints |
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Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List
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Country Name |
Previous Rating (30.09.2017) |
Current Rating (31.12.2017) |
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Israel |
B1 |
B1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low Risk |
A2 |
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Moderately Low Risk |
B1 |
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Moderate Risk |
B2 |
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Moderately High Risk |
C1 |
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High Risk |
C2 |
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Very High Risk |
D |
ISRAEL - ECONOMIC OVERVIEW
Israel has a technologically advanced free market economy. Cut diamonds, high-technology equipment, and pharmaceuticals are among its leading exports. Its major imports include crude oil, grains, raw materials, and military equipment. Israel usually posts sizable trade deficits, which are offset by tourism and other service exports, as well as significant foreign investment inflows.
Between 2004 and 2013, growth averaged nearly 5% per year, led by exports. The global financial crisis of 2008-09 spurred a brief recession in Israel, but the country entered the crisis with solid fundamentals, following years of prudent fiscal policy and a resilient banking sector. Israel's economy also weathered the 2011 Arab Spring because strong trade ties outside the Middle East insulated the economy from spillover effects.
Slowing domestic and international demand and decreased investment resulting from Israel’s uncertain security situation reduced GDP growth to an average of roughly 2.8% per year during the period 2014-17. Natural gas fields discovered off Israel's coast since 2009 have brightened Israel's energy security outlook. The Tamar and Leviathan fields were some of the world's largest offshore natural gas finds in the last decade. Political and regulatory issues have delayed the development of the massive Leviathan field, but production from Tamar provided a 0.8% boost to Israel's GDP in 2013 and a 0.3% boost in 2014. One of the most carbon intense OECD countries, Israel generates about 57% of its power from coal and only 2.6% from renewable sources.
Income inequality and high housing and commodity prices continue to be a concern for many Israelis. Israel's income inequality and poverty rates are among the highest of OECD countries, and there is a broad perception among the public that a small number of "tycoons" have a cartel-like grip over the major parts of the economy. Government officials have called for reforms to boost the housing supply and to increase competition in the banking sector to address these public grievances. Despite calls for reforms, the restricted housing supply continues to impact younger Israelis seeking to purchase homes. Tariffs and non-tariff barriers, coupled with guaranteed prices and customs tariffs for farmers kept food prices high in 2016. Private consumption is expected to drive growth through 2018, with consumers benefitting from low inflation and a strong currency.
In the long term, Israel faces structural issues including low labor participation rates for its fastest growing social segments - the ultraorthodox and Arab-Israeli communities. Also, Israel's progressive, globally competitive, knowledge-based technology sector employs only about 8% of the workforce, with the rest mostly employed in manufacturing and services - sectors which face downward wage pressures from global competition. Expenditures on educational institutions remain low compared to most other OECD countries with similar GDP per capita.
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Source
: CIA |
Company name and address
FOX-WIZEL LTD.
Telephone 972
3 905 01 00
Fax 972
3 905 02 06; 905 02 00
Email: shahar@fox.co.il
P.O. Box 76
6 Hermon Street
AirPort City Park
AIRPORT CITY 7019900
ISRAEL
HISTORY & LEGAL FORMATION
Originally
incorporated as a sole proprietorship in 1990.
Converted into a
private limited company, registered as per file No. 51-215760-3 on the
01.06.1995.
Originally
registered under the name WIESEL TEXTILE MARKETING LTD., which changed to the
present name on 23.01.2002.
On 15.04.2002
published a prospectus offering shares to the public on the Tel Aviv Stock
Exchange (raising a sum of NIS 48 million) and on 1.8.2002 converted into a
public limited company (Registration number remain as before).
SHARE CAPITAL
Authorized share
capital NIS 150,000.00, divided into: -
15,000,000 ordinary shares of NIS 0.01 each,
of which
13,476,211 shares amounting to NIS 134,762.11 were issued.
SHAREHOLDERS
1.
WIZEL HOLDINGS A.Y.H LTD., 25%, equally owned by
Harel (Eliezer) Wiesel, Iftach Wiesel and Assaf Wiesel*,
2.
Avraham Dov Fuchs (through TRICO FOX LTD.), 24.6%,
3.
YELIN LAPIDOT Group, PHOENIX AND EXCELLENCE - 3
institutional investors, holding some 8%, 7% and 1%, respectively,
4.
Shares are also traded on the Tel Aviv Stock
Exchange.
*Note: Surname Wiesel may also
be spelt Wizel
DIRECTORS
1.
Avraham Zeldman, Chairman,
2.
Harel Wiesel, General Manager,
3.
Avraham Dov Fuchs,
4.
Dani Rimoni,
5.
Alon Cohen,
6.
Ms. Osnat Ronen.
BUSINESS
Designers,
importers, manufacturers (via subcontractors in South East Asia), marketers,
exporters and retailers of apparel and fashion accessories under the brand name
“Fox” under 4 categories ("Fox Men", "Fox Women", "Fox
Kids" and "Fox Baby"), as well as “Fox Home” (household products).
Also operating
stores under fashion brand names "American Eagle" "and
"American Eagle Kids", "Aerie" ("AE" Brand),
"The Children's Place", "Yanga", as well as
"Nike" and "Mango" brand stores.
Also operates a
retail chain "Laline" for ambiance and body care products of 108
local branches, plus 29 "Laline" concessionaire stores abroad, and 1
owned store – flagship shop 1535 Broadway NYC in New York, via US subsidiary.
In April 2018
subject signed an agreement to acquire 50% of SHILAV DIRECT MARKETING MOTHER'S
HOME (hereafter SHILAV), Israel’s leading retail chain store for babies and
children goods (see more in CHARACTER).
Sales are to
subject's shops, to wholesalers, institutional organs, as well as to
concessionaires overseas.
Manufacturing is
carried out through some 20 suppliers and subcontractors abroad (though working
mostly with 2 large subcontractors).
Major foreign
supplier: WINGSRICH, Hong Kong/ China.
As of 31.03.2018,
operating 318 branches in Israel, of which 182 "Fox" brands
(including 43 stores of "Fox Home" brand and 29 combined
"Fox" apparel and "Fox Home" stores); 42 branches of
American Eagle apparel (including Aerie lingerie brand, and "American
Eagle Kids" brand in store in store format), 44 “The Children's Place”
shops, 49 “Mango” shops and 1 “Urban Outfitters” shop.
Operating via
concessionaires 125 retail stores and Points of Sale abroad under the name
"Fox" and "F&X" in 11 countries.
In addition, via
its subsidiaries, market clothes and fashion accessories under the brand names
"Yanga" shoe brands (24 shops), “Retailors” (19 NIKE shoes shops + 17
“Footlocker” shops), “Billy House” (38 shops) and "Sack's" (19
shops).
Advertising
agency: GITAM BBDO.
Operating from
rented premises (headquarters and offices, warehouse and logistics center), on
an area of 15,680 sq. meters (12,600 sq. meters built), in 6 Hermon Street, Fox
House, Airport City Park (near Ben Gurion Airport, Lod), from Logistics center
in Modi'in, and from shops nationwide - as of 31.12.2017, a total of some 540
rented shops, including combined shops, situated mainly in shopping malls and
centers.
Note: some stores are
combined stores which are considered 2 stores.
Landlord in
Airport City: TNUVOT KESHET.
There are 4,797
employees in subject itself (had 4,409 employees in the end of 2016). Having
6,670 employees in the Group as of end of 2017 (had 6,491 employees in the end
of 2016).
MEANS
In June 2006
subject issued bonds to the public through the Tel Aviv Stock Exchange, raising
a sum of NIS 70 million. In December 2008 subject announced on self-purchase of
its bonds (issued May 2006) up to total of NIS 10 million.
There are 7
charges for unlimited amounts registered on the company's assets, in favor of
Bank Leumi Le’Israel Ltd. and Bank Hapoalim Ltd. Charges are on the Company's
open credit cards balances, in lien to credit frameworks given (last charge
placed December 2014).
Financials
Consolidated B/S shows:
NIS
(thousands)
ASSETS 31.03.2018 31.12.2017
Current assets:
Cash and
cash equivalents 206,613 217,614
Short term
investments & financial assets 232,477 195,333
Customers 186,798 134,383
Other
debtors 76,326 66,124
Stock 327,331 293,695
1,029,545 907,149
Non-current
assets:
Investments in affiliated companies 152,858 169,258
Fixed assets (net) 282,625 272,169
Other non-current assets 172,575 146,698
608,058 588,125
1,637,603 1,495,274
======== ========
LIABILITIES
Current liabilities 576,699 455,876
Non-current liabilities 376,786 383,618
Equity 648,118 655,780
1,637,603 1,495,274
Current market
value US$ 276.2 million.
REVENUES
Consolidated
Statement of Income
NIS
(thousands)
Year
ended in 31.12
2015 20165 2017
Sales 1,322,427 1,463,611 1,619,421
Gross profit 750,257 832,928 927,758
Operating income 68,024 95,536 116,267
Pre-tax income 65,624 86,964 94,690
Net income 54,681 66,032 75,887
======== ======== ========
Consolidated
revenues for the first 3 months of 2018 were NIS 424,774,000 (21.5% increase
compared to the parallel period in 2017), making a gross profit of NIS
239,017,000, an operating income of NIS 19,048,000, and a net income of NIS
15,688,000.
OTHER COMPANIES
FOX-WIZEL CHINA
LTD., 100%, a subsidiary in China.
BILLY HOUSE LTD.
("Billabong Israel"), 50%, agents and marketers of Billabong surfing
apparel and goods.
FOX WIZEL (BVI)
LTD., 100%.
YANGA LTD., 50%,
operating a retail fashion chain.
RETAILORS LTD.,
90%, operating 19 Nike shops and 17 Footlocker shops, fully owns RETAILORS
SPORTS INC., Canada.
FWS RETAIL LTD.,
100%, operating the 'American Eagle' brand shops.
A.H. FASHION
MANUFACTURE AND MARKETING 3020 LTD. (known as "Sack's"), 50%.
LALINE CANDLES AND
SOAPS LTD., 50%, manufacturers and marketers of home care and body care
products and accessories, including soaps, candles, body care items,
toiletries, ambiance products, etc. Fully owns LALINE US HOLDINGS INC.,
operating Laline shop in New York, fully owns LALIN LLC.
TERMINAL X ONLINE
LP, 56.25%, established January 2017, operates the Group’s online sales.
U.F.A.RETAIL LTD.,
80%, operating 1 “Urban Outfitters” shop,
WIZEL REAL ESTATE
A.Y.H. 1999 LTD.
WIZEL HOLDINGS
A.Y.H LTD., a private limited company (registration
No. 51-285821-8).
TRICO FOX LTD., a
private limited company (registration No. 51-062111-3).
BANKERS
Bank Leumi Le’Israel
Ltd., Principal Branch Tel Aviv (No. 800), Tel Aviv.
CHARACTER AND REPUTATION
In February 2010 a
motion was submitted to the court for the approval as a class action lawsuit
against subsidiary LALINE, for NIS 109 million, which ended in compromise in
September 2014, in which LALINE will provide compensation (via discount and
increased package size) in volume of NIS 2.5 million.
In October 2017 a
motion was submitted for approval as class action lawsuits against subject for
NIS 4 million claiming it is difficult to be taken off member list.
In December, 2
motions were submitted for their approval as class action lawsuits against
subject, one for NIS 13.2 million (claiming misleading sizes) and the other for
NIS 54.3 million (misleading discount advertising). In March 2018, a motion for
class action lawsuit filed against subject, also related to the members’ club
issue.
It should be noted
that the procedure for such claims to be approved are usually long and in most
cases eventually turned down.
In February 2016
subject reported that in the process of preparing 50% subsidiary LALINE's 2015
annual statements, inaccuracies were found regarding the stock and customers
articles, between 2011 and Q3-2015. This may decrease subject's profit from
held companies up to NIS 5.5 million for that period (out of NIS 356.7 million
net profit for the period). Matter is currently in preliminary checking, and
subject will update its findings.
Apart from that,
nothing unfavorable learned.
FOX – WIZEL is a
leading vendor in fashion wear for women, men and kids in Israel. According to
a report from November 2017, subject’s Group is among the 3 largest apparel
retail Groups, holding a 9% market share in the local market.
Since 2005/6
subject (via concessionaires) also began expansion into the Eastern and Central
European markets, starting with Bulgaria and Romania, as well as to the Far
East (Singapore, Thailand). Since 2007/8 also expanded to Panama and Canada (later Canadian activities were closed). Since 2009 subject
opened stores in Puerto Rico and expanded to other countries.
In 2006 subject
acquired 50% of BILLY HOUSE LTD. ("Billabong Israel"), agents and
marketers of "Billabong" and "Rif" surfing apparel and
goods in Israel since
In 2007, subject
completed the acquisition of 50% of LALINE CANDLES AND SOAPS LTD. and LALINE
INTERNATIONAL LTD., manufacturers and marketers of candles and soaps, in
consideration of NIS 12.87 million, in cash.
In March 2018 the
negotiations for the sale of 25% of LALIN by the other shareholders filed (in
the deal, subject was supposed to acquire an additional 1% on hold 51% of
LALIN).
In 2007, subject
acquired 50% of fashion retail store in chain (then, 4 boutiques) Sack's
(company name is A.H. FASHION MANUFACTURE AND MARKETING 3020 LTD.), for NIS
24.6 million. Sack's manufactures and markets women fashion to wholesalers, on
top of the retail stores.
In July 2010 subject signed an agreement with American AEO
MANAGEMENT CO. to be the sole local representatives of "American
Eagle" and "Aerie" brands.
In
April 2015 FOX-WIZEL
established FWS RETAIL, to which it transferred its
AE brand activities. In May 2015 FOX-WIZEL
sold 50% of FWS to AMERICAN EAGLE for US$ 12.6
million.
In
May 2015, 4 AE retail stores were opened with an investment of NIS 5 million.
In
2010 subject entered a new segment under the brand name “Fox Home” for home
textile and accessories. The household products market is estimated at NIS 1
billion annually and is considered saturated and highly competitive.
In July 2013
subject received the franchise of the children's apparel brand "The
Children's Place".
In May 2014 subject reported it received the
representation of CHARLES & KEITH INTERNATIONAL (C&K) to open a retail
chain store for women's shoes, bags and accessories. Estimated investment for
the first 8 years is NIS 30 million, all from subject's own resurces. In
February 2015 subject launced the first 2 shops.
During 2017 and
beginning of 2018 subject closed all its "Charles & Keith" shops
(16 branches in total).
In August 2014
subject acquired from Nir Horovitz and Meital Young 50% of YANGA LTD.,
operating a retail fashion chain of 7 branches for NIS 9 million.
In August 2014
subject received from NIKE a non-exclusive representation, to open NIKE chain
store. According to a report from December 2014, subject intends to invest NIS
30 million, of which NIS 20 million from acquisition of stores of current
franchisers (in December 2014 subject acquired 4 shops for NIS 8.9 million +
payment for stock from franchiser VENDOME FASHION). Additional NIS 10 million
will be from opening new stores.
In March 2015
subject purchased 90% of RETAILORS, which owns 5 Nike shops.
In April 2016
RETAILORS received from NIKE CANADA a license to open a NIKE retail chain in
Canada. According to a report from April 2014, an initial investment of NIS 15
million will be made, and activities will be carried out via fully owned
Canadian company CANCO.
In October 2017
subject received the representation of NIKE in Canada for 7 years, intending to
open 7 brand shops by the end of 2018. According to a report, subject will
invest US$ 5 million in its first store.
In September 2014 subject signed an agreement to acuire
the fashion chain MANGO (operating 29 shops)
from ELBIT IMAGING, for NIS 35 million, following an agereement with PUNTO of
Spain (owner of MANGO brand) paying it NIS 3 million for the franchise. Deal
was completed in January 2015.
In
April 2015 subject
established FWS RETAIL, to which it transferred its
AE brand activities. In May 2015 subject
sold 50% of FWS to AMERICAN EAGLE for US$ 12.6
million.
In January 2016
FOX opened its flag store in Manhattan, New York, with an investment of US$ 2.5
million.
In March 2016
subsidiary BILLY HOUSE LTD sold its holdings
(66.7%) in MARCHA BALERINA LTD. (import
and marketing of shoes), which operated to that date 11 points of sales for NIS 2.3 million. FOX Group still provides
MARCHA logistics and distribution services.
In March 2016
subject established "American Eagle Kids" subchain, operating as store in "American Eagle" store business model, launching 11 branches at once,
investing US$ 350,000.
In
October 2016, 90% subsidiary RETAILORS received
the representation of leading international FOOT LOCKER Chain, to establish a
retail chain with investment of NIS 30 million in 5 years. First shops opened
in 2017. In addition, the Group won the Israel Airport Authority tender to
operate a duty-free shop in the Ben Gurion Intl. Airport, which will be the
chain's flagship store.
In September 2017
FOX reported that it signed 3 representation agreements with URBAN OUTFITTERS
INC., of USA, to operate URBAN OUTFITTERS retail brands shops (“Urban
Outfitters”, “Free People” and “Anthropologie”), via a new established
subsidiary, 80% held by FOX. In April 2018 subject launched the first branch in
Ashdod.
In January 2017
subject, together with partner, established TERMINAL X ONLINE, limited
partnership, as FOX Group’s online sales platform (all the Group's goods),
based on the sales know-how by AMERICAN EAGLE. The “Terminal X” online sales
platform was launched in November 2017, with investment of NIS 40 million. In
March 2018 the entrance of a 3rd partner (SMILE – operating an
online platform) to TERMINAL X was completed, in which smile will provide
advertising rights in volume of NIS 50 million. Consequently, subject’s
holdings in TERMINAL X decreased from 75% to current holding.
In January 2018,
subject signed an agreement with credit card company LEUMI CARD (VISA), for
establishing and operating a joint members’ club, which include issuing a
non-banking credit card to the members, with benefits. FOX’s members’ club has
1.4 million members. Subject is expected to gain NIS 165 million from LEUMI
CARD in 10 years period.
In April 2018
subject signed an agreement to acquire 50% of SHILAV, Israel’s leading retail
chain store for babies and children goods, operating 74 branches, and its
sister company SHESEK SUPPLYERS SERVICES FOR THE MOTHER INFANT
(importers of SHILAV goods) for NIS 37.5 million. Deal is awaiting final
approvals.
The local fashion market has been significantly influenced
by the entrance of new international fashion players to the already highly
competitive local market.
After many years of growth, since the 2nd half
of 2017, sources in the branch report on significant slow-down in sales and
drop in revenues. That results also in closure of branches and collapse of few
retail chains. Besides the fact that the winter season remains relatively dry,
the reasons are the fierce competition, the constant increase in online sales,
as well as the rise in shopping overseas by Israelis travelling abroad.
According
to a report from November 2017, the Israelies acquired fashion products in 2017
in volume of NIS 19 billion, of which NIS 15 billion via local retail stortes,
NIS 2.9 billion via online purchasing and NIS 1.1 billion were purchased in
shopping abroad. The fashion chains hold 74% of the loacl fashion market, and
the 7 largest retail fashion groups hold 41% of the loacl market (remainign 26%
via private retail stores).
From
RIS data, a firm that measures revenues from sales of 2,700 shops in Israel, a
9% decrease in number of fashion stores was noticed in 2016 compared to 2015
(mainly as large chains unified shops and sub-brands, significantly cutting
costs in view of the intensifying competition), yet overall sales rose by 1.43%
from 2015 despite the lowre number of shops. Still, the rise in sales was lower
than the growth rate in population (2%).
The
trend in 2017 apperas to be similar to 2016, though the main finding is the
weakening of the international chains (e.g. H&M), besides ZARA Group, while
Israeli chains maintain stability, some even rise with sales.
According to the
Central Bureau of Statistics (CBS), import of Clothing and Footwear in 2017
dropped slightly (0.3%) compared to 2016, summing up to NIS 7,996 million (in
NIS terms, rose by 6.3% in $ terms). This comes after rises in the last years:
in 2016, 2015 and 2014 import rose by 3.7%, 4.2% and by 8.3% (in NIS terms),
respectively from the previous years.
Chinese production comprises the largest
portion of imported textile goods followed by France, Italy, Hong Kong and
Turkey. The increase in imports emanates from the exposure to foreign markets
policy by the State.
From the CBS
National Accounts for 2017 on consumption expenditure of households in the
domestic market, it turns that expenditure on semi-durable goods rose by 6.4%
from 2016 (after rising by 4.4% in 2016 and 1.2% in 2015), and included
expenditure on Clothing and Footwear, which climbed by 6.1% (after 3.2% rise in
2016 and 1.4% rise in 2015).
SUMMARY
Good for trade
engagements.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
INR 67.45 |
|
|
1 |
INR 89.79 |
|
Euro |
1 |
INR 78.79 |
|
ILS |
1 |
INR 18.86 |
Note :
Above are approximate rates obtained from sources believed to be correct
INFORMATION DETAILS
|
Analysis Done by
: |
PRI |
|
|
|
|
Report Prepared
by : |
DNS |
RATING EXPLANATIONS
|
Credit Rating |
Explanation |
Rating Comments |
|
A++ |
Minimum Risk |
Business dealings permissible with minimum
risk of default |
|
A+ |
Low Risk |
Business dealings permissible with low
risk of default |
|
A |
Acceptable Risk |
Business dealings permissible with
moderate risk of default |
|
B |
Medium Risk |
Business dealings permissible on a regular
monitoring basis |
|
C |
Medium High Risk |
Business dealings permissible preferably
on secured basis |
|
D |
High Risk |
Business dealing not recommended or on
secured terms only |
|
NB |
New Business |
No recommendation can be done due to
business in infancy stage |
|
NT |
No Trace |
No recommendation can be done as the
business is not traceable |
NB is stated where there is insufficient information to facilitate rating. However, it is not to be considered as unfavourable.
This score serves as a reference to assess
SC’s credit risk and to set the amount of credit to be extended. It is
calculated from a composite of weighted scores obtained from each of the major
sections of this report. The assessed factors are as follows:
·
Financial
condition covering various ratios
·
Company
background and operations size
·
Promoters
/ Management background
·
Payment
record
·
Litigation
against the subject
·
Industry
scenario / competitor analysis
·
Supplier
/ Customer / Banker review (wherever available)
This report is issued at
your request without any risk and responsibility on the part of MIRA INFORM
PRIVATE LIMITED (MIPL) or its officials.