Delta Galil Reports Record Gross Profit on $33 Million US Tariff Refund in Q2 2026

Delta Galil, the Israeli underwear manufacturer, reported a significant boost in profitability in the second quarter of 2026 following a $33 million tariff refund from US authorities under President Donald Trump's tariff program. This refund contributed an additional $16.8 million to both gross and operating profit and added $13 million to net profit for the quarter and the first half of the year. However, the tariff refund also reduced private brand segment revenues by $11 million.

The company, controlled by Isaac Dabah, plans to reinvest part of the refund to enhance its production and supply chain to further improve future profitability. Group sales grew 9% to $512 million in Q2, and excluding the tariff refund's impact on private brand sales, sales increased by 11% compared to the same period last year. Delta Galil also reduced discounts outside Israel on its Seven For All Mankind and private brand products, benefiting from a higher average selling price due to the addition of the youth sports brand Daily Drill.

A major driver of sales growth was a 40% increase in sales in Israel, aided by the strengthening of the shekel and euro against the dollar. The tariff refund and sales growth led to a 26% rise in gross profit to $253 million and a 6.7 percentage point increase in gross margin to 49.5%, compared to 41.8% in the prior year quarter. Excluding the tariff refund, the gross margin was still a record 45.2% for the company.

Operational efficiencies implemented over the past two years globally also contributed to a 76% increase in operating profit before one-time items, reaching $54.6 million. Net profit for the quarter was $32.7 million, nearly doubling from $16.7 million in Q2 2025, boosted by the tariff refund. Concurrently with the earnings release, Delta Galil announced an $8 million dividend distribution.