Fashion chain Castro to bring back 90% of staff furloughed due to Hamas war

Retail group sees improvement over past month in same-store sales, including online sales; had put 30% of its workers on unpaid leave in October

Sharon Wrobel is a tech reporter for The Times of Israel.

Castro fashion store in Israel. (Courtesy)
Castro fashion store in Israel. (Courtesy)

Fashion retailer Castro Model Ltd. announced on Thursday that it will bring back 90 percent of the staff that it furloughed following the outbreak of the war with the Hamas terror group, as shoppers have been coming back to its stores and online sales have also started to recover.

The clothing chain furloughed an estimated 30% of its workforce in October as the ongoing war led to a sharp drop in customer traffic. Other retailers, including fashion chain Fox Group, have also put at least 30% of their staff on unpaid leave.

The family-founded retailer, which was established in 1950, operates 361 stores across the country, out of which 108 are Castro-branded fashion shops. Traded on the Tel Aviv Stock Exchange, the group includes 10 independent brands – Castro, Hoodies, Carolina Lemke Berlin, Urbanica, KIKO, Yves Rocher, Top Ten, Castro Kids, Castro Home and Urbanica Station – and employs about 4,500 workers.

Israel declared war in the aftermath of the brutal Hamas-led onslaught on October 7 when thousands of terrorists burst into southern Israel from Gaza and rampaged through communities and massacred 1,200 people, most of them civilians. That day also saw about 240 people, including women and children, abducted by the Iran-backed group and taken to Gaza.

Israel called up a massive 350,000 reservists to join the fighting in recent weeks with the intention of toppling the terror group’s regime in Gaza and securing the release of the hostages.

In the first few weeks of the war, depressed consumer sentiment affected private consumption, and as a result Castro saw its revenues, including online sales, drop 40% between October 7 and November 15 versus the same period last year, the group said last month.

Most of the decline was recorded during the month of October as sales at the group’s physical stores of clothing and fashion accessories were dented. The retail chain estimates that due of the war, it lost potential revenue of about NIS 79 million ($21 million) during the October 7 to November 15 period.

To mitigate the damage to demand caused by the war, Castro last month announced steps to cut expenses and manpower costs, including the closure of some of its nonprofitable clothing stores in Israel.

Over the past month, same-store sales, including online sales, started to recover, the fashion retail group said. As a result, the damage to sales since the start of the war, in the period between October 7 and December 13, narrowed to about 6% compared to the corresponding period last year, Castro said.

Looking ahead to the coming weeks, the retail chain said it expects the trend of improvement in sales to continue in this quarter.

In the third quarter ending September 30, before the outbreak of the war, Castro saw its net profit more than double to NIS 12.7 million, compared with the NIS 5 million recorded in the corresponding quarter last year, mainly due to an increase in sales of its clothing segment and as a result of streamlining processes.

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