The highest gross profitability in its history: Delta Galil summarizes the quarter

Delta Galil, the underwear manufacturer, received a customs refund of $33 million from US authorities in the second quarter of 2026, following the tariff program of US President Donald Trump. The refund boosted the company's profits, and its impact was reflected in both the second quarter and the first half of the year, with an addition of $16.8 million to gross and operating profit and a contribution of $13 million to net profit. At the same time, the customs refund led to an $11 million reduction in revenue for the private label segment. Delta Galil stated that it intends to use part of the amount to improve the production system and supply chain, with the aim of improving profitability in the future.

Sales of the group, controlled by Isaac Dabah, grew by 9% in the quarter and totaled $512 million. Excluding the impact of the customs refund, which reduced sales in the private label segment by $11 million, the company's sales in the second quarter rose by 11% compared to the same period last year. Outside of Israel, Delta Galil reduced discounts on products sold in the Seven For All Mankind segment and the private label segment, and benefited from an increase in the average price per item in the brand segment, thanks to the addition of the youth sports brand Daily Drill. However, the main improvement in sales was due to a 40% jump (in dollar terms) in Delta Israel sales. Another positive impact on sales was the strengthening of the shekel and the euro against the dollar.

The customs refund and the increase in sales contributed to a 26% growth in gross profit, which totaled $253 million in the quarter, and an increase of 6.7 percentage points in the gross profit margin, which stood at 49.5% compared to 41.8% in the corresponding quarter. Excluding the impact of the customs refund, the gross profit margin was 45.2% of sales — the highest quarterly gross profit margin Delta Galil has presented to date.

Over the past two years, Delta Galil has carried out efficiency measures at its factories around the world, which contributed to an improvement in operating profitability. Along with the customs refund, organic growth, and the increase in sales, the company improved operating profit before one-time items by 76%, and it totaled $54.6 million. Delta Galil ended the quarter with a net profit of $32.7 million, compared to a profit of $16.7 million in the corresponding quarter. The net profit line was positively affected by a $13 million contribution from the customs refund. Simultaneously with the publication of the reports, the company announced a dividend distribution of $8 million.