Harel Wizel on the investor call: two major growth engines are still not working

Fox Group, under the management of Harel Wizel, concluded the second quarter with revenues of 1.8 billion shekels and a net profit of 123 million shekels. Alongside the numbers, Wizel sat down for an investor call and spoke with unusual openness about the activities that still require improvement, the strategy regarding competitors, and explained why the group distributed a dividend of only 150 million shekels — despite a cash reserve of more than a billion shekels worthy of distribution.

Wizel emphasized that the current results were achieved while two of the most significant growth engines are still not delivering the goods. "We have more big engines that are not working," he admitted openly. "Retailors, because of Nike, is not yet where we want it to be, and Jumbo is not yet where we need it to be. But the other engines are working amazingly." Indeed, Retailors is dealing with the global challenges of the weakness of the Nike brand, and at Jumbo Greece, the group has not yet reached the desired profitability. "When all the engines are working as they should, then it will be a completely different company in terms of the bottom line."

Meanwhile, those covering for the weakness are the core activities and additional brands. The fashion and home fashion activity in Israel, which includes, among others, Fox, Fox Home, Mango, and American Eagle, grew in the quarter by about 15% to revenues of about 570 million shekels. At the same time, the "Others" sector, which centers activities such as Shilav, Flying Tiger, Sunglass Hut, Minene, and Itay Brands, saw sales jump to about 433 million shekels and doubled its operating profit.

The challenge at Jumbo

Later in the conversation, Wizel dwelled on the challenges at the Jumbo chain and explained why developing the activity is more complex. "Opening a Jumbo store, 3,000 meters, is not like opening a Laline store, with all due respect, of 50 meters," he said. Despite the challenges, Wizel expressed full confidence in the model: "Jumbo is a crazy platform. The Greek company is the company with the largest proportional operating profit I have seen in any industry. We are in contact with them... their team is working with us on all the things and failures to improve. We are improving, it takes time, we will open more stores."

One of the main centers of change in the chain concerns shortening the supply chain, in which goods from China were previously sent to Greece and from there to Israel while paying excess customs duties. "We know what the mistakes are at Jumbo, we are fixing everything," Wizel claimed. "The goods arrive from China to Greece and from Greece they arrive here. No need to stop in Greece... it will save tens of millions of shekels a year. We are working on a logistics warehouse in China and to send directly from there to here."

The price of uncertainty

Alongside the growth, one of the questions that arose in the conversation was why Fox distributed a dividend of only 150 million shekels, when it had much higher amounts worthy of distribution at its disposal. Wizel linked the decision directly to the level of security uncertainty in Israel. "I look forward very cautiously," he emphasized. "No one knew there would be Corona, October 7... I prefer to keep money in the till and go step-by-step. When there are 3 years here [of] Switzerland, [then] we will distribute half a billion."

However, this caution did not prevent the company from recently going out to raise bonds. According to Wizel, the demand was several times higher than the amount the company asked to raise. "There was demand six times higher, several billions. They told me 'Stop, how much to raise?' - some said 400, some 600, so I said: 'Come on, let's go for 555'."

He also pointed to the cash flow as a source of strength for the group. "Last year, and two years ago, and three years ago, there was about a billion shekels of flow every year. Three years, boom boom boom. And this year too we will reach that."

One of the activities Wizel was asked about was Laline. The chain's sales did rise in the quarter by 2.4% to about 74 million shekels, but sales in identical stores, including online, fell by about 10%. The operating profit remained almost unchanged, around 16 million shekels.

Wizel rejected the focus on profitability rate alone. "All of you would be willing to invest in a company of 4 billion shekels turnover with 7% operating profitability, rather than in a company of 50 million with 25%," he said. "I count how much money can be earned. They have 27% of 4 shekels and I have 21% of 300 million shekels. Where are all the competitors of 2007 and where is Laline today?".

Taking the foot off the gas

The bigger challenge is currently at Retailors. The revenues of Fox's sports sector fell in the quarter by about 1.3% to about 594 million shekels, and sales in identical stores, including online, fell by 7.4%. In Nike alone, there was a decrease of 9.5%, after a decrease of 17.7% in the first quarter.

Wizel does not intend to try to compensate for the weakness by opening stores at a high pace. "The reports of Nike in the world are known, but it is still the strongest brand," he said. "In giant companies, a fix sometimes takes two-three years. If you ask me right now if we want to open stores like crazy - the answer is no. It is better to wait and press the gas again when the conditions ripen."

Also, the possibility of exploiting the drop in Retailors' stock to delist the company from trading is not currently on the agenda. "Someone threw the idea at me and said 'Do you know how much money you will earn when you IPO again in a few years?'. I told him that the capital market will hate me for life," Wizel said. "For 30 years I have been working with transparency. We don't buy cheap when the stock drops and IPO again expensive. Maybe we will be in a certain situation less rich, but we will be honest and decent."

On the other hand, one of the activities that stood out for the better in the quarter was Terminal X. The company's sales grew by 20.5% to about 161 million shekels and the operating profit jumped by about 59% to about 18.6 million shekels. At the same time, the company is expanding its model beyond a multi-brand site and is acquiring small activities and brands that it seeks to increase through its online and logistics infrastructure.

Wizel emphasized that for him, growth on the internet is not a goal in itself. "Terminal X presents 12 consecutive quarters of growth. Internet companies in the world grow like crazy without earning just to capture market share - we found the right balance," he said.

Terminal X was established as the e-commerce arm of the Fox Group, a multi-brand site intended to sell under one roof the group's brands alongside external brands. However, in recent years it has been gradually changing its character.

Instead of settling for selling others' brands, it is acquiring small activities and brands itself, and trying to increase them through the online, logistics, and shipping systems it has already built. In the second quarter of 2026, this change is already prominent in the results, and in the investor call, the company's managers even signaled that the acquisition journey is far from over.

Terminal X sales grew in the quarter by 20.5% to about 161 million shekels, and alongside the increase in the number of transactions, active customers, and visits to the site, part of the growth comes from the companies and brands it acquired in the last year.

One of them is Sadeh Bar, the modest fashion brand that was recently acquired and is already profitable, according to Terminal X CEO Nir Horowitz. "We think that this market of modest fashion is a very large and growing market," he said in the investor call. According to him, at Terminal X they see Sadeh Bar as a base for expansion in the field and believe that it can be made a market leader.

Horowitz clarified that this is not the end of the story in terms of acquisitions. "You don't see here the results of Sadeh Bar and you don't see here additional acquisitions that are on the way, and they will happen yet this year," he said. According to him, the company is looking for activities that can be significantly increased through its existing infrastructure: "Every company here has a potential of at least 50 million shekels, with double-digit operating profit." One of the next areas on the target is the wellness and vitamin market, alongside home and cosmetic fields, Terminal X is already examining companies in the field for acquisition.

Regarding the foreign currency field, where Fox absorbed a significant influence from hedging in the first quarter, Wizel claims that the policy does not change according to the market direction. "On the subject of policy, we have been working the same way for 30 years. On the day we place an order with the supplier, we lock the currency," he said. "We are not currency speculators, we buy clothes and need to give a competitive price."

"Deals will return to the table"

Despite the caution he describes regarding the situation in Israel, Wizel said that for now he does not identify a significant slowdown in the consumer: "I don't see any change in the Israeli consumer right now, even though by nature I am a pessimistic person. If there are no more wars here, the economic situation is reasonable and we are continuing with all our might."

However, the uncertainty has already stopped at least part of the expansion plans. According to Wizel, on the eve of October 7, Fox was conducting contacts to bring additional international brands to Israel, but these were stopped: "If there is quiet here for a year, like in Switzerland, all these deals will return to the table immediately."