Strong results in Germany and throughout Europe helped Tel Aviv-based Delta Galil Industries Ltd. increase sales, margins and profits in the first quarter.
The company raised earnings and sales guidance for the year, pushing anticipated revenues further above the $1 billion mark it had previously said it expected to surmount during the current year.
In the three months ended March 31, net income grew 40.2 percent to $9.3 million, or 34 cents a diluted share, from $6.7 million, or 26 cents, in the 2013 period.
Revenues expanded 4.8 percent to $238.1 million from $228.3 million. Gross margin escalated to 30.4 percent of sales from 28.4 percent in the prior-year period, helping operating income to increase 28.3 percent, to $14.8 million.
The company said that the accretive effect of the higher gross margin was partially offset by an increase in selling and marketing expenses reflecting investments in the expansion of the business, which has reported organic sales growth for 18 consecutive quarters.
Isaac Dabah, chief executive officer, said that diversification into more branded products, activewear and retail operations helped lift profitability.
“Our top-line performance was highlighted by rising sales in Germany and the rest of Europe and stable results in North America,” he said. “We are enthusiastic about our prospects for the balance of 2014, which is expected to be our first year of sales in the $1 billion-plus range.”
Sales for the year, earlier projected to be between $1.035 billion and $1.065 billion, are now anticipated to reach $1.045 billion to $1.075 billion. Sales last year were $974.7 million. Diluted earnings should reach $1.95 to $2.14 a share versus the previous forecast of a range between $1.93 and $2.11 and last year’s earnings per share of $1.75.
The firm, which expanded its penetration in Europe and in men’s with its purchase of Schiesser AG in 2012, remains interested in expansion through various means, including acquisitions and licensing. It ended the quarter with $51.2 million in cash and cash equivalents on its balance sheet, $10 million higher than a year ago.