Delta Galil's Q2 growth driven by sales increase and tariff refund

Israeli apparel manufacturer Delta Galil Industries, Ltd. (Delta Galil) has reported financial results for its second quarter ended June 30, 2026. Sales for the Caesarea-based business increased 9 percent to a second-quarter record of 511.60 million dollars, compared to 470.10 million dollars in the prior-year period. On a constant-currency basis, sales grew 5 percent.

Gross profit for the quarter rose 26 percent year-over-year, which will subsequently be referred to as YoY, reaching 253.20 million dollars. The performance was supported by a 33 million dollar tariff cash refund received during the quarter, which contributed a 16.80 million dollar benefit to gross profit and EBIT. Excluding the tariff recovery, gross profit rose 17 percent YoY, achieving an all-time record gross margin of 45.2 percent. Total reported gross margin for the period expanded by 670 basis points to 49.5 percent.

Delta Galil chief executive officer Isaac Dabah stated: “We delivered an outstanding second quarter that meaningfully strengthened the momentum established in the first quarter and demonstrated broad-based progress across our business. Excluding the benefits of an IEEPA tariff refund, we achieved record second-quarter sales and an all-time record gross margin of 45.2%, as well as double-digit growth in all other profitability indicators.”

Dabah added: “We expect to use a portion of the proceeds from the tariff refund to invest strategically in our manufacturing, supply chain and overall structure to support our future growth and profitability.”

Operating income and net profit metrics

The business recorded improvements across its core profitability metrics:

EBIT excluding non-core items and inclusive of tariff benefits surged 76 percent to 54.60 million dollars, compared to 31 million dollars in the second quarter of 2025. Excluding non-core items and tariff refunds, EBIT expanded 22 percent.

Net income excluding non-core items grew 106 percent to 34.40 million dollars. On a reported basis, net income reached 32.80 million dollars, up 96 percent YoY, benefiting by 13.20 million dollars, or 0.50 dollars per diluted share, from the tariff recovery.

Diluted earnings per share reached 1.21 dollars compared to 0.57 dollars in the second quarter of 2025. Excluding tariff impacts and non-core items, diluted EPS rose 25 percent to 0.71 dollars.

Earnings before interest, taxes, depreciation and amortisation, excluding IFRS 16 adjustments and tariff refunds, rose 17 percent to 45.90 million dollars.

For the six-month period ended June 30, 2026, total sales rose 12 percent to 1.08 billion dollars, compared to 968.80 million dollars in the first half of 2025. First-half gross profit reached 491.90 million dollars, delivering a gross margin of 45.4 percent. Net income excluding non-core items for the first six months rose 52 percent to 52 million dollars.

Reaffirmed full year 2026 financial guidance

Delta Galil reaffirmed its full-year guidance for 2026, which excludes non-core items and tariff refund impacts:

Sales: Projected between 2.29 billion dollars and 2.33 billion dollars, compared to 2.12 billion dollars in 2025.

EBIT: Forecasted between 204 million dollars and 212 million dollars, compared to 174.20 million dollars in 2025.

EBITDA: Expected between 324 million dollars and 332 million dollars, compared to 282.80 million dollars in 2025.

Net income: Anticipated between 116 million dollars and 123 million dollars, compared to 102.60 million dollars in 2025.

Diluted EPS: Projected to settle between 4.00 dollars and 4.23 dollars, compared to 3.55 dollars in 2025.