Delta Brands Reports Modest Sales Growth Amid Profit Decline
Translated & summarized from Calcalist by baba
Delta Brands reported a 2.8% increase in third-quarter sales to NIS 345.5 million, but its net profit dropped 23% to NIS 28.7 million. CEO Anat Bogner cited a strong prior-year quarter and supply chain delays impacting winter stock sales. The company's expansion in Europe and increased operating expenses also contributed to the profit decline. Despite challenges, franchised brands saw a 30% revenue jump, and the company is launching new product lines.
The story in 5 lines · by baba
- Delta Brands' Q3 revenue grew 2.8% to NIS 345.5 million, but net profit fell 23% to NIS 28.7 million.
- CEO Anat Bogner cited a strong prior-year quarter and supply chain issues for the profit decline.
- Expansion in Europe and increased operating expenses impacted the company's profitability.
- Franchised brands, including Bath & Body Works, saw revenue surge 30% to NIS 72 million.
- The company launched new HOME and leisurewear collections, showing initial positive results.
Delta Brands reported a modest increase in sales for the third quarter of 2026, accompanied by a significant drop in profitability. The company's revenue rose by 2.8% to NIS 345.5 million, primarily driven by the growth of its international brands. However, this growth was partially offset by a decline in sales from its Israeli brands. The operating profit fell by 9% to NIS 44 million, and net profit plummeted by 23% to NIS 28.7 million.
CEO Anat Bogner attributed the moderate revenue growth to facing a strong comparative quarter from the previous year, which saw a 7% increase in same-store sales following the resolution of the conflict with Iran. She noted a slight decrease in same-store sales for the current quarter, explaining that the prior year's strong performance in July was boosted by a promotion. The company also contended with a delay in the arrival of winter merchandise due to typhoon disruptions affecting the supply chain, leading to the sale of summer stock at significant discounts.
Despite these challenges, gross profit increased by 4.1% to NIS 207 million, with its margin improving to 59.9% from 59.2%, largely due to the strengthening shekel. However, this improvement was insufficient to counteract a rise in operating expenses, partly fueled by the company's expansion in Europe with the "Bath & Body Works" brand. Delta opened five new stores for this brand in Germany between March and October. Sales and marketing expenses climbed 9% to NIS 157.2 million, representing 45.5% of revenue, up from 42.9% in the same period last year.
The company operates in two segments: owned brands (Delta, Fix, Panta Rei) and franchised brands (Victoria's Secret, Bath & Body Works). Owned brands saw a 2.7% sales decrease to NIS 273.5 million, while franchised brands' revenue surged by 30% to NIS 72 million, with Bath & Body Works contributing NIS 46 million. The franchised segment's operating profit jumped 58% to NIS 6.2 million, despite a loss of approximately NIS 4 million from the new European operations of Bath & Body Works.
Looking ahead, Delta Brands has launched a HOME collection and a leisurewear line, which Bogner stated are showing promising sales and customer loyalty. The company is proceeding cautiously with its expansion into new fashion categories, focusing on basic items with lower risk.