Delta Israel Brands reported a quarter that looks excellent in the headline this morning - and the stock rose 5.12%.
But the company itself supplies the number that qualifies the headline, and that is to its credit.
What was reported
| Quarter | Change | |
|---|---|---|
| Revenue | - | +18.1% |
| EBITDA | 83.6 | +16.8% |
| Net profit | 36.9 | +27% |
| Net margin | 11.9% | +0.9pt |
In millions of shekels
And the number that qualifies everything
June 2025 lost 12 operating days to Operation Am KeLavi.
The company neutralises them itself when computing same-store sales - and the result is just 3.2%, or 3.7% including online sites.
The gap between 18.1% and 3.2%
The 18.1% revenue jump is not adjusted for the lost trading days. Same-store sales are.
So the headline measures, among other things, how many days the stores were open, while the operating metric measures how much sold in an average store. 3.2% is the number that describes the business.
And across the whole first half, same-store sales rose just 1.1%.
The breakdown: where the momentum actually is
The owned brands - Delta, Fix and Panta Rei - are 77% of quarterly sales:
- Sales NIS 240.2 million, +9.5%
- Operating profit NIS 42.7 million, +18.3%
- Same-store sales: just +2.6%
And in the first half the core actually weakened: its operating profit fell 11.5% to NIS 66.5 million, with the margin eroding from 15.4% to 13.4%.
The franchise arm - Victoria's Secret and Bath & Body Works - is the real story:
- Sales NIS 70.1 million, +61.5%
- Operating profit NIS 8.6 million, +112.7%
- Same-store sales +5.9%, and +14.8% including online
- 28 stores against 20 a year ago
And the detail hiding inside the franchise arm
The German expansion is costing money right now.
Excluding the Bath & Body Works Europe build-out, Israeli franchise operating profit was NIS 11.3 million at a 16.8% margin - rather than the NIS 8.6 million at 12.2% reported.
So Europe cost roughly NIS 2.7 million in the quarter, and about NIS 5.9 million in the half.
That is not a problem - it is an investment. But it means the Israeli business is far more profitable than the reported number shows, and that future growth is being bought at the price of today's margin.
What is genuinely strong in the report
Cash flow. Operating cash flow jumped 79% to NIS 80.1 million, and over the trailing twelve months reached NIS 311 million.
And inventory management is particularly impressive: inventory fell NIS 52.8 million to NIS 237.5 million, and inventory days collapsed from 277 to 195 - a reduction of 82 days. That is a real operational improvement independent of any comparison base.
Online sales: NIS 39.0 million, +12.6%, which is 12.6% of total revenue.
On the balance sheet: NIS 206.5 million of cash, 244 stores across 37,359 square metres, and 1.55 million loyalty club members.
The dividend and the plan ahead
A new dividend of roughly NIS 27 million - 110.47 agorot per share - payable 20 August. Total 2026 distributions reach NIS 82 million, and NIS 558.9 million since 2021.
The company publishes no numeric guidance, but does give a roll-out plan: from 244 stores today to 255 by end-2026 and 273 by end-2027. That includes Bath & Body Works in Germany, due to grow from 3 stores to 10 by end-2027.
And the robotic distribution centre is due to go live next quarter, with immediate storage-cost savings.
My Angle
A personal opinion of Ilan Abramov - not advice, not a recommendation
This is a report worth reading in reverse order from how it is presented.
The headline says 18.1%. The number describing the business says 3.2%. And what should be said to the company's credit: it is the one publishing the second and explaining why the first is inflated. Not every company does that.
And breaking out the segments reveals something more interesting: the core - 77% of the business - grew just 2.6% on a same-store basis, and its half-year operating profit actually fell 11.5%. All the momentum comes from an arm that is less than a quarter of sales.
What I take as a genuine positive: 82 days off inventory and operating cash flow up 79%. Those are numbers independent of any comparison base or war effect - that is management.
And what I file under questions: whether Victoria's Secret and Bath & Body Works are big enough to carry the company while the core is flat, and at what pace the German investment pays itself back.
