Golf 2025: Home Carries the Improvement, Apparel Still Stumbles, and 2026 Will Be Tested by Logistics and Cash

Getting To Know The Company

Golf in 2025 looks less like a classic apparel story and more like a home, textile, and lifestyle retail group that still carries a meaningful apparel layer. That is not just a framing choice. Home already accounts for 53.7% of revenue, 55.3% of segment operating profit, and 56% of the commercial footprint. A reader who looks only at the consolidated headline can miss that two different businesses are now sitting inside the same listed company: home is expanding and improving productivity, while apparel is still trying to find stability.

What is working today is fairly clear. Revenue rose to NIS 919.4 million in 2025, home revenue climbed to NIS 493.8 million, same-store productivity in home increased to NIS 1,181 per square meter after neutralizing the effect of the “Am KeLavi” days, and the customer club already includes about 1.8 million members. Golf also moved from planning to execution in its new Caesarea logistics center, completed the Sabon deal on December 31, 2025, and entered 2026 with 20 acquired Sabon stores and a broader logistics base.

But the story is still not clean. Net income fell to NIS 44.5 million from NIS 64.9 million, net finance expense jumped to NIS 45 million from NIS 20 million, and the equity-to-assets ratio declined to 19% from 25%. There is also an important nuance in the operating line: operating profit before other items actually slipped to NIS 82.2 million from NIS 83.9 million. The increase to reported operating profit of NIS 88.4 million relied partly on moving from NIS 1.2 million of other expense to NIS 6.2 million of other income, mainly because of lower fixed-asset impairment charges. That is not cosmetic. It is the difference between a clean operating improvement and a result helped by accounting relief.

That is the right filter for Golf right now. The group is no longer a stuck retailer without growth levers, but it is also not yet in a place where the new logistics center, Sabon, and recurring dividends can be treated as a proven and repeatable model. 2026 looks more like a proof year than a breakout year. Investors need to see three things: home has to keep carrying the business without buying growth through deeper discounting, apparel has to stop eroding productivity, and the new infrastructure has to translate into real cash rather than a better organizational story.

Events And Triggers

The new logistics center moved into operation, but the savings are not fully visible yet

The group took possession of the new Caesarea logistics center at the start of 2025, completed the move out of four previous logistics sites, and started operating an automated sorter during the second half of the year. The company says the site covers about 29,000 square meters, monthly rent and management fees are about NIS 1.2 million, and the lease runs until January 15, 2040, with an extension option to February 15, 2047. Management’s March 2026 presentation already frames 2026 as phase two of the automation effort, with the new sorting process running from early in the year.

The problem is the transition period. In 2025, total expense for the new logistics center was NIS 53.6 million, versus NIS 47.7 million for the previous logistics sites in 2024. Selling and marketing expense also rose to NIS 448.1 million, partly because of a larger commercial footprint, higher depreciation, and one-off costs tied to the move to Caesarea. In simple terms, Golf is already paying the bill for the new infrastructure, while the full efficiency benefit has not yet been proven in the group-level numbers.

Sabon is strategically coherent, but it also adds execution load

The Sabon agreement was signed on August 17, 2025, and closed on December 31, 2025, for total consideration of about NIS 9.2 million, made up mainly of inventory. Golf received an exclusive five-year franchise to operate Sabon’s stores and website in Israel, with an option to extend for another five years, and also acquired the wholesale activity and operating assets, including inventory and leases. Starting January 1, 2026, the company began operating Sabon stores, absorbing employees, and marketing the brand in stores and in wholesale.

Strategically, this makes sense. Golf is widening the home segment toward wellness, cosmetics, and gifting, while also adding another B2B layer. But this is not a frictionless deal. The 20 Sabon stores are set to be included in the home segment in 2026, which means the strongest part of the group is also taking on more inventory, more leases, and more operating complexity. If the integration works, the home segment becomes more differentiated. If it does not, Golf simply adds another execution layer onto the part of the business that is already doing most of the heavy lifting.

Onot and Jump did not close, and that says something too

On November 9, 2025, Golf signed a non-binding memorandum of understanding to acquire Onot and Jump, but on March 11, 2026 it updated that negotiations had not matured into a binding agreement. This is not a financial trigger by itself, because the planned consideration was defined as immaterial to the company. Even so, it is still informative. Golf is clearly looking for portfolio expansion and additional growth engines, but at least in this case management did not push the transaction through at any price. Read together with Sabon, this suggests that management is actively scanning for external growth, while still willing to walk away when diligence or negotiations do not produce a compelling outcome.

Several other threads can shape 2026

The company plans to open about 11 new stores in 2026. It also expects to launch a new e-commerce site in 2026 that will unify the group’s online platforms. At the same time, it continues to expand the wholesale channel that was established in 2024, and on November 27, 2025 it won a Police tender for a 24-month term starting January 1, 2026, with extension optionality through 2036. None of these threads changes the story on its own, but together they make 2026 a year in which almost every strategic lever at Golf is moving at once.

Efficiency, Profitability And Competition

The key number in this report is not that the group grew. The key question is where the growth came from and what price was paid for it. Home revenue increased 6.7% to NIS 493.8 million and segment operating profit rose 35% to NIS 48.9 million. Apparel revenue did increase 4.1% to NIS 425.5 million, but segment operating profit fell 15% to NIS 39.5 million. In other words, home did the work for itself and part of the work for apparel as well.

The second thing to focus on is growth quality. Management explains that higher sales were driven by stronger demand and attractive value offers to customers. Economically, that means growth did not come only from brand strength or clean pricing power. It also came from discounting. That is why gross profit rose in absolute terms to NIS 565.7 million, while gross margin edged down to 61.5% from 61.6%. The company explicitly says the erosion came mainly from a higher discount rate and was only partly offset by a lower average USD/ILS exchange rate.

The fourth quarter looks better, but even there the read needs care. Revenue fell slightly to NIS 250.7 million from NIS 251.8 million because unusually warm weather delayed winter collection sales, yet gross margin improved to 63.6% from 61.0%. The company ties that improvement mainly to the lower USD/ILS exchange rate in the quarter. That matters because it suggests that part of the late-year improvement came from FX rather than a deeper improvement in pricing or mix. If the question is whether 2026 can look structurally better, investors need to separate what is repeatable from what depended on the dollar.

The productivity split makes the divergence even clearer. In same stores, after neutralizing the “Am KeLavi” days, revenue per square meter in home increased to NIS 1,181 from NIS 1,126. In apparel it fell to NIS 1,440 from NIS 1,449. That is not a collapse, but it is clearly not a full recovery either. A reader focused only on consolidated revenue can miss that apparel is still not doing the job investors would want it to do.

The inventory story is also more nuanced than it first looks. The group cut product inventory to NIS 166.7 million from NIS 230.6 million, while inventory write-downs, count differences, and damaged stock losses declined to about NIS 15 million from about NIS 27 million. The inventory provision balance also fell to about NIS 6 million from about NIS 10.4 million. On one hand, that points to cleaner stock management. On the other, the company is explicit that the market remains highly competitive, that 2025 growth was supported by attractive offers, and that apparel is still very exposed to weather and seasonal overstock. So the inventory decline should be treated as a real relief, but not as a final solution.

Competition itself is not easing. In apparel, the company names Mango, Zara, Castro, H&M, Renuar, Onot and Jump, and online players such as Temu, AliExpress, Next, Asos, Amazon, and Terminal X. In home, it names Fox Home, Castro Home, Vardinon, Ikea, Zara Home, H&M Home, and discount chains such as Max Stock and Jumbo Stock. That matters because Golf is not operating in a market where every cost increase can be passed through. If profitability improves from here, it will have to come through productivity, sourcing, logistics, and inventory management rather than clean pricing power.

Cash Flow, Debt And Capital Structure

The big number in 2025 is not net income. It is cash. Cash flow from operating activities jumped to NIS 233.6 million from NIS 155.6 million. But anyone who reads that number without looking at what built it is missing the point. The sharpest driver inside the cash flow statement was a NIS 63.9 million inventory reduction. In other words, 2025 was also a working-capital release year. That is positive, but it is not the same thing as a clean increase in recurring cash generation.

That is exactly why the framing matters. The company does not disclose a maintenance CAPEX number, so it is hard to build a clean normalized maintenance-cash view. The better lens here is all-in cash flexibility. That asks how much cash remains after the period’s actual cash uses. On that basis, the picture is less comfortable: NIS 233.6 million of operating cash flow was offset by reported CAPEX of NIS 45.2 million, lease principal repayment of NIS 99.8 million, lease interest of NIS 35.1 million, bank and other debt repayment of about NIS 42 million, cash interest of NIS 2.0 million, and NIS 50 million of dividends. Before fresh borrowing, that leaves a deficit of about NIS 40.6 million.

That bridge choice matters. I am not subtracting the full NIS 172.0 million of total lease-related cash outflow because part of the variable lease cash is already reflected inside operating cash flow. For financing flexibility, the cleaner approach is to deduct lease principal and lease interest separately, as they appear in the cash flow statement. The result is clear: 2025 materially improved liquidity, but it still did not prove that recurring dividends and a heavy lease footprint can be funded comfortably from internal cash generation alone.

The balance sheet says the same thing from two different angles. On the positive side, cash and cash equivalents rose to NIS 72.5 million, and together with short-term investments reached NIS 94.6 million. Inventory fell sharply, and the company still had NIS 61 million of unused credit lines. On the less comfortable side, lease liabilities rose to NIS 729.7 million, equity fell to NIS 216.7 million, and the equity-to-assets ratio dropped to 19%.

The really interesting point is that banking pressure appears far lower than economic pressure. The company remained in compliance with its financial covenants, which are tested excluding IFRS 16. Tangible equity stood at about NIS 229 million, or about 32% of the tangible balance sheet, and net financial debt divided by operating working capital stood at negative 18%. In other words, the banks do not yet look like the immediate bottleneck. The real bottleneck is whether profitability and logistics will translate into repeatable cash before the combination of leases, interest, and dividends pushes the company back toward higher funding dependence.

Forecasts And What Comes Next

Five non-obvious takeaways matter most for 2026:

• First: reported operating profit improved partly because of other items, while operating profit before other items actually declined.
• Second: home is not just the larger segment anymore. It is now the part of the business carrying most of the group’s productivity and profit improvement.
• Third: the 2025 cash-flow jump was heavily tied to inventory release, so 2026 will be judged on working-capital discipline as much as on sales.
• Fourth: the new logistics center is already in the P&L and balance sheet, but the savings are not yet clearly visible at group level.
• Fifth: Sabon could become a quality growth layer for home, but it enters the story just as 2026 begins under security disruption and with the logistics system still in an execution phase.

What management is really trying to signal

The company is signaling a build-out year: broader wholesale, a unified site in 2026, around 11 store openings, more automation in the logistics center, and Sabon as a brand that expands the portfolio. That does not read like a pure defense and cost-cutting message. It reads like an attempt to move the group into its next phase. But the sequencing matters. These moves are only attractive if they lift efficiency before they lift complexity.

What has to happen over the next 2 to 4 quarters

The first task is to stabilize apparel. This does not require a miracle. It requires evidence that same-store productivity stops slipping, and that weather or discounting no longer absorbs all the gains home is creating elsewhere in the group. The second task is to turn the Caesarea logistics center from an infrastructure story into a story of cost per unit sold, delivery times, and inventory control. The third task is to prove that Sabon adds more than volume, meaning it improves gross profit and customer proposition in home rather than just adding stores and leases.

The fourth task is cash. On March 10, 2026, Golf approved another NIS 10 million dividend. That signals confidence, but it also raises the proof bar. If 2026 shows inventory rebuilding, weaker apparel profitability, or higher Sabon integration costs, the dividend will quickly look more like a demanding capital allocation choice than a comfortable distribution.

Why 2026 is a proof year and not a breakout year

Because the year already started with a real disruption. The company says that from February 28, 2026, following Operation “Shaagat HaAri”, the stores, online sites, and logistics center were operating only partially, and that by the report date there was still no clear compensation framework. That changes how the year should be read. The immediate question is not only whether Golf can grow, but whether it can execute while supply, footfall, and overall visibility may all remain under pressure.

On the positive side, the company enters that period with a broad customer base, 69.2% of sales coming from club members, a digital platform that is supposed to be unified in 2026, and a home segment that already looks operationally stronger than apparel. On the less comfortable side, minimum wage increased in April 2025 to NIS 6,248, and most employees are on minimum wage. That is a reminder that even if the supply chain improves, the core retail cost base remains sensitive.

Risks

The first risk is growth quality. The company itself says 2025 sales were supported by attractive customer offers. As long as discount and online competition remain intense, top-line growth does not automatically mean durable margin improvement.

The second risk is inventory returning. 2025 benefited from a NIS 63.9 million inventory release. If 2026 rebuilds part of that inventory, investors will quickly see how much of the 2025 cash story was driven by working capital rather than clean earnings power.

The third risk is the logistics burden. The new logistics center is meant to improve the network, but for now it has already raised finance cost, increased lease liabilities, and still relies on future efficiency gains to justify itself. On top of that, the company is still working to obtain a business license for the Caesarea site, even if it currently assesses the exposure as immaterial.

The fourth risk is the cost base itself. The company employs 1,851 people, and a large part of the workforce is on minimum wage. Wage inflation, import and freight costs, and the labor intensity of retail and logistics leave limited room for error.

The fifth risk is 2026 itself. According to the company, by the report date operations were still only partially active following Operation “Shaagat HaAri”, and there was still no certainty around compensation. That is an external risk, but one that can directly shape the reading of performance from the very first quarter.

Short Interest Read

Short positioning in Golf remains small. On March 27, 2026, short float stood at only 0.15%, versus a sector average of 0.93%, while SIR stood at 2.84 against a sector average of 2.423. That does not mean there is no skepticism around the name, but it does mean the debate is not being expressed through a crowded short. If valuation changes meaningfully, it is more likely to come from execution than from short covering.

Conclusions

Golf improved in 2025, but not in a uniform way. Home carried growth and most of the profit improvement, inventory was released, and the logistics center moved from planning into operation. Against that, apparel still has not fully recovered, finance costs are heavier, and the cash story looks better on the balance sheet than on the full cash bridge. This is exactly the kind of company where the direction is improving, but the proof threshold is still rising.

Current thesis in one line: Golf became a stronger home retailer in 2025 with a weaker apparel layer still attached to it, and 2026 will decide whether the new logistics center and Sabon create real cash generation or simply add complexity.

What changed versus the older understanding is clear: home is no longer just a stable anchor but the segment carrying the group; at the same time, the 2025 cash improvement depends heavily on inventory release and therefore deserves a more careful reading. The strongest counter-thesis is that 2025 was mostly a working-capital clean-up year helped by fourth-quarter FX, while 2026 may be left with too much fixed cost and lease load. What may change the market’s reading in the short to medium term is how quickly logistics savings, Sabon contribution, and apparel stability show up in the numbers. Why it matters: if Golf can translate infrastructure, brands, and a large loyalty base into repeatable cash, it starts to look like a more efficient retailer rather than a company that simply tidied inventory for one year.

Over the next 2 to 4 quarters, investors need to see three confirmations: stability in apparel productivity, visible savings from the logistics center, and a Sabon integration that does not damage cash flexibility. What would weaken the thesis is a return to inventory building, demand softness that requires even more discounting, or cash generation that again depends more on funding than on operating profitability.