By  on May 16, 2008

ATLANTA—The weak U.S. dollar and manufacturing problems led to a net loss of $700,000, or 3 cents per share, in the first quarter of fiscal 2008 at Tefron Ltd., compared to net income of $3.8 million, or 17 cents per share, in the year-ago quarter.

Revenues rose 4.5 percent to $50.9 million from $48.8 million

Tefron, a leading producer of seamless intimate apparel and engineered-for-performance activewear based in Israel, said that decline in gross and operating margins in the quarter compared with the first quarter in 2007 was primarily due to the significant devaluation of the U.S. dollar versus the New Israeli shekel; the higher proportion of cut-and-sew products in the activewear sales mix, which have a lower profitability than seamless products, and continuing short-term manufacturing challenges in its Hi-Tex division.

Yos Shiran, CEO, said the company is currently focusing its efforts on overcoming the hurdles at the Hi-Tex division and reducing operational costs.

He added that Tefron has seen two quarters of sequential growth in activewear sales, mainly because of increased orders from Nike for their Next Generation products. “We are looking for this trend of growth in our activewear sales to continue into the second quarter of 2008, driving a growth in our overall sales,” he said.

Shiran said the company expects second quarter 2008 revenues of around $45 million, driven by continued growth in activewear sales but Tefron also expects the weak U.S. dollar and those manufacturing hurdles to continue to negatively affect profitability.

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