During the second quarter (Q2) ending 30 June 2025, Delta Galil reported a 90-basis point margin rise to 42.8%, up from 41.9% in the corresponding period of the previous year.
The improvement in gross margin was primarily attributed to beneficial exchange rates, an uptick in direct-to-consumer (DTC) sales, and a favourable mix of business segments.
These positive factors were somewhat counterbalanced by the effects of US tariffs and a reduction in export subsidies related to the company's operations in Egypt.
For Q2, Delta Galil's gross profit reached $201.3m, an increase from $197.4m in the same quarter of 2024.
Delta Galil CEO Isaac Dabah said: “Our record gross margin in this quarter on a backdrop of tariff uncertainty is a true achievement and a testament to the strength and flexibility of our vertical operating model and the agility of our operating team.”
Delta Galil's overall performance in Q2 FY25
Despite various “one-time exogenous factors,” Delta Galil's sales remained steady at $470.1m in the second quarter, closely aligning with the $471.4m recorded in the second quarter of 2024.
The company experienced growth in DTC sales for its owned brands, with a 9% rise in the second quarter.
Earnings before interest and taxes (EBIT) for the second quarter stood at $31.0m, which was lower than the $37.8m reported in the same quarter of 2024.
This decrease was largely due to elevated selling and marketing expenses resulting from adverse exchange rate movements, expansion of DTC operations, and additional costs linked to Passionata, a brand acquired last year. However, this was partially offset by the higher gross margin.
The company’s net income was reported at $16.7m, down from $21.0m during the same period last year. This translates to diluted earnings per share (EPS) of $0.57 in Q2 FY25, compared to $0.74 in last year's second quarter.
The company's earnings before interest, taxes, depreciation, and amortisation (EBITDA) excluding IFRS 16 impacts, was recorded at $39.1m for the second quarter, marking a decrease from $46.5m in the same quarter of 2024.
“Delta delivered solid second quarter financial results despite the challenging US tariff environment this year. Despite the tariff impact, second quarter steady sales demonstrate the strength of our diversified, global platform including robust growth in our branded direct-to-consumer channels,” Dabah added.
Delta Galil's first half performance
In the year-to-date, Delta Galil’s gross margin stood at 41.7%, slightly below the 42.1% reported for the first half of 2024.
The first half of 2025 witnessed a 5% sales increase to $968.8m from $922.2m in the same period of the previous year.
The company’s EBIT for the first six months equalled last year's figure at $63.7m but represented a smaller percentage of total sales compared to last year's ratio.
Net income for H1 FY25 increased slightly to $34.3m from $33.1m in H1 FY24, with EPS slightly higher at $1.18 against the $1.13 reported for the same period in 2024.
EBITDA excluding IFRS 16 impact for H1 FY25 came in at $79.6m compared to H1 FY24's figure of $84.2m.
Delta Galil's outlook
Due to prevailing tax and tariff rates, Delta Galil has revised its full-year guidance for 2025, with sales now projected between $2.11bn and $2.14bn against the original expectation of $2.12bn to $2.17bn.
The company also trimmed its EBIT forecasts to the range of $171m to $176m, from $192m to $200m previously.
Net income expectations are set between $97m and $101m and diluted EPS is anticipated to fall between $3.32 and $3.46.
To mitigate tariff impacts, Delta Galil is strategically optimising sourcing and production towards countries with lower tariff exposure and collaborating with vendors and customers to minimise effects on operations.
The company estimates that under current tariff rates, potential impact on its annual operating income will not exceed $22m for 2025, which is accounted for in its updated guidance.
