Castro-Hodis Reports 92% Net Profit Surge, May Close 40 Cosmetics Stores If Targets Missed

Castro-Hodis Group posted significant growth in its second quarter of 2026 compared to the same period in 2025, with revenues rising 15.2% to 580 million shekels, operating profit jumping 67.6% to 101 million shekels, and net profit soaring 92.3% to 44.6 million shekels. The group's operating profit margin improved sharply from 12% to 17.4%. However, while the apparel and fashion accessories sectors showed strong sales and profitability gains, the cosmetics and personal care segment continued to drag down results, with declining revenues and a deepening operating loss.

Castro CEO Yair Ohayon stated in an investor call that although the cosmetics chains Kiko Milano and Yves Rocher hold significant potential, the company is considering closing them if they fail to meet performance targets. He emphasized that the losses in this segment are relatively small and do not burden the overall group, which is performing exceptionally well in apparel (Castro, Hodis, Urbanica) and fashion accessories (Top Ten, Carolina Lemke). Apparel revenues grew 14.5% to 383 million shekels with a 57% rise in operating profit to 67 million shekels, while accessories revenues increased 18.5% to 173 million shekels and operating profit surged 77.4% to 37 million shekels.

The cosmetics sector showed no revenue growth and doubled its operating loss from 358,000 shekels to 743,000 shekels year-over-year. The group currently operates 362 stores across seven brands, including 75 Castro apparel stores, 71 Hodis, 38 Urbanica, 71 Top Ten accessories, 65 Carolina Lemke eyewear, and 42 cosmetics stores (22 Kiko Milano and 20 Yves Rocher). Same-store sales declined 2.4% in apparel and 19% in cosmetics but rose slightly by 1% in accessories. Adjusting for 12 days lost due to the "With the Dog" military operation against Iran, same-store sales actually increased by about 10.3%.

Castro also announced a new five-year distribution partnership with Renoir to launch the Chinese sports brand ANTA Sports in Israel starting in 2027, with an estimated investment of 30 million shekels for physical and online retail. A founders' agreement was signed recently with Renoir and Israel Chen, who will lead the new subsidiary as CEO. Ohayon highlighted the group's strong liquidity position, with over 433 million shekels in cash against 361 million in financial debt, and reaffirmed Castro-Hodis's strategic plan for continued growth and profitability across all brands.