Supermarket chain Blue Square said falling sales and write-offs due to the domestic recession in Israel, plus increased competition had contributed to declining sales.

Group sales for 2002 fell 6.6%. Fourth quarter like-for-like sales at Blue Square stores dropped 11.7%, due to the effect of "hard discount stores" or cheaper and larger outlets opened by the company and its competitors.

Blue Square president and chief executive Yoram Dar said trade had been hit by the ongoing recession and two years of “the difficult security situation". This had brought about “a market-wide consumer shift towards hard discount formats, impairing the value of some of our assets".

Dar said the company would continue to improve efficiency in 2003 through streamlining its workforce, increasing private label sales, closing underperforming stores and focusing more on hard discount stores.