This is a structural review of a quarterly report filed today. It is not investment advice, a recommendation to act, or investment marketing. Every figure was taken from the structured filing submitted to MAYA (report 1765519, second quarter 2026, in shekels), and the ratios were computed directly from it.
Three lines that tell the same story
Fox's second-quarter report contains three lines worth reading in sequence, because each one explains what happened between the one before it and the one after:
| Line | Amount | Of revenue |
|---|---|---|
| Revenue | ILS 3,389.0 million | 100% |
| Gross profit | ILS 1,982.2 million | 58.5% |
| Operating profit | ILS 255.7 million | 7.5% |
| Net profit | ILS 89.3 million | 2.6% |
The journey from 58.5% to 2.6% is the whole story of this report, and it happens in two entirely separate jumps - one large and familiar, the other smaller and considerably more interesting.
The first jump: ILS 1,726.5 million between gross and operating
A gross margin of 58.5% is a high number. It says that for every 100 shekels that came in, the cost of the merchandise itself was about 41.5 shekels. That is the characteristic picture of fashion retail selling its own brands: the margin on the item itself is wide.
But between gross profit and operating profit, ILS 1,726.5 million was absorbed - 50.9% of total revenue. In other words, almost the entire gross margin was consumed by operating costs: store rent, wages, marketing, logistics and administration.
This is not an unusual finding and not a sign of failure - it is the shape of physical retail. A store chain buys a wide gross margin at the price of a heavy fixed cost base. What does deserve attention is the sensitivity that structure creates: when fixed costs cover almost the entire gross margin, a relatively small change in revenue translates into a much larger change in operating profit. That works in both directions.
The second jump: ILS 140.6 million that is not operations at all
Here comes the part that changes how the report reads. Of the ILS 255.7 million operating profit, only ILS 115.1 million remained before tax. Along the way ILS 140.6 million - 55.0% of operating profit - was gone.
Put differently: more than half of everything the business generated from its operations did not reach the pre-tax line. The items sitting there are principally financing - the cost of debt and lease liabilities - not commercial activity.
This is the detail that explains why two businesses with exactly the same operating profit can look completely different at the bottom. Operating profit measures the business; what sits below it measures the financial structure around it.
The balance sheet: ILS 4.40 of assets for every shekel of equity
The total balance sheet stands at ILS 10,778.0 million, and equity at ILS 2,451.7 million. The ratio between them is 4.40 to one, meaning equity represents 22.8% of the balance sheet.
That ratio is the context for the second jump. A balance sheet 4.4 times larger than equity inherently carries significant liabilities, and liabilities have a cost that appears in exactly the place where the ILS 140.6 million disappeared. These are not two separate findings - they are the same finding, once from the income statement and once from the balance sheet.
One further reference point: quarterly revenue represents 0.314 of the total balance sheet. At this quarter's pace, annual revenue approaches the size of the balance sheet itself - a ratio typical of retail, where assets serve a fast turnover.
Two final lines that are easy to miss
Tax. Of the ILS 115.1 million pre-tax profit, ILS 89.3 million remained as net profit - an effective tax rate of 22.5%.
Non-controlling interests. Net profit is ILS 89.3 million, but the amount attributable to the company's shareholders is ILS 72.0 million. The difference, ILS 17.2 million - 19.3% of net profit - belongs to partners in consolidated subsidiaries.
This is a practical point: anyone reading the "net profit" line and dividing by the share count gets a number higher than the real one. Basic earnings per share in the report stand at ILS 5.18, and are computed from the attributable figure, not from full net profit.
What this report does not say
The structured filing submitted to MAYA does not include the comparable quarter a year earlier, so everything written here is a cross-section of a single quarter - not a trend. From these figures alone it is impossible to say whether the operating margin eroded or improved, whether financing became more expensive, or whether same-store sales rose or fell. Those three questions are answered only in the full report and its notes.
And the necessary caveat: the structure described here is neither "good" nor "bad." A wide gross margin with a heavy cost base and high leverage is a familiar form of physical retail, and it behaves differently from online retail and from a manufacturer. What this review does is describe the shape - not evaluate it, and not recommend it.
