Golf: How the weak dollar boosted profit by 180%
The net profit of the Golf group jumped to 15.6 million shekels, the stock has already risen more than 20% this year, and the company continues to distribute dividends. However, there is a factor hidden in the reports that controls the picture and may pose a risk. What investors must understand before getting carried away by the headline.
The Golf group published its results for the second quarter of 2026, and one figure stands out: net profit almost tripled, amounting to 15.6 million shekels compared to 5.6 million shekels in the same quarter last year. An impressive jump, but those who look only at the bottom line might miss the real reason behind it.
Operating profit, which reflects the business activity itself, rose much more moderately: from 22.9 million shekels to 25.9 million shekels, and sales climbed by about 3% to 228.7 million shekels. So where did most of the profit jump come from? From financing expenses.
These were cut almost in half, from 16.9 million shekels to 8.8 million shekels, and the company explains that "the decrease in net financing expenses in the second quarter compared to the same quarter last year is mainly due to a decrease in foreign currency hedging expenses."
In simple terms: the dollar. Golf is an importer that purchases a significant portion of its merchandise in foreign currency. When the dollar weakens, imports become cheaper, which is also evident in the gross profit line — the gross profit margin in the quarter rose to 65%, compared to 62.9% last year. The weak dollar, which at the end of May reached a 30-year low at a rate of 2.8 shekels, helped Golf on two fronts: it lowered the cost of inventory and reduced the hedging expenses that burdened the reports a year ago.
In addition, the corresponding quarter in 2025 was particularly weak due to Operation "With a Lion's Heart" against Iran, which interrupted consumer activity. That is, part of the "growth" this year is actually a recovery from a low base, and the timing of the Passover holiday offset part of this effect.
Unlike other fashion companies, Golf has significant activity in home fashion, but in the past quarter, it was the apparel segment that stood out for the better: sales rose about 10% to 110.8 million shekels, and operating profit more than doubled — from 9.4 to 19.3 million shekels, with an impressive operating profit margin of 17.5%.
In contrast, the home fashion sector weakened: sales fell slightly, and operating profit was cut almost in half, from 13.4 to 6.5 million shekels, partly due to the timing of Passover and the costs of establishing and adapting the Sabon chain, which entered the field from the beginning of the year.
Despite the weakness in the last quarter, Golf's diversification in home design and textiles (Golf & Co, Kitan, Sabon, Golf Kids) gives it a certain advantage over other fashion companies in the industry. This diversification spreads the sources of income and serves as a safety cushion when one area is lagging. This quarter illustrated this in the opposite way: fashion carried the group, while home fashion was the weak link.
Golf has a net financial surplus of 66 million shekels (compared to 27 million a year ago), cash balances of 90 million shekels, and it continues to distribute a quarterly dividend — this time 15 million shekels.
And yet, the currency tailwind works in both directions. If the dollar strengthens, the same lever that boosted profit could reverse: both gross profit and financing expenses could return to weigh on the results. That is, the profit jump should be read with caution — part of it is high-quality and operational, and part depends on the dollar exchange rate, which Golf does not control.
Golf stock has already risen about 20% since the beginning of the year and about 24.5% in the last year, and is traded at a value of about 359 million shekels. But before getting excited about the headline, it is worth remembering that behind the surge is also the exchange rate, and not just clothes.
