Delta Galil has eliminated 65 positions across its new group of contemporary brands, WWD has learned.
The Israel-based apparel company — owner of P.J. Salvage, Nearly Nude, Karen Neuburger, Fix and other brands — made the cuts Thursday across Seven For All Mankind, Splendid and Ella Moss’s Vernon and Los Angeles offices. The cuts come just a few months after it was announced Delta Galil would acquire the three brands from VF Corp. for $120 million. The price for the three brands, which made up VF’s contemporary brands coalition represented a significant haircut from earlier values of the brands. Seven For All Mankind went to VF Corp. in 2007 for $773 million and two years later Splendid and Ella Moss joined the group for $161 million, according to a BB&T Capital Markets research note.
The layoffs announced to employees Thursday, were made across multiple departments including marketing, retail, design, sales and merchandising, according to a source speaking on condition of anonymity.
A call to a Delta Galil spokeswoman in New York Friday was not returned.
Delta Galil chief executive officer Isaac Dabah told WWD in June, at the time the deal was announced, that all parts of the incoming businesses would be carefully reviewed. “We can’t say that all the people will remain in place, but we’re looking to keep the company in tact and continue to grow sales and make it as efficient as possible,” he said at the time.
The three brands making up the contemporary group, according to data from VF Corp. presented in a Delta Galil investor presentation at the time of the acquisition, shows a steady decline for the group in both revenue and earnings before interest, taxes, depreciation and amortization since 2012. The company that year reported EBITDA of $74 million on revenue of $446 million. The three brands last year had revenue of $344 million and EBITDA of $23 million. The group’s EBITDA this year was projected at the time of the deal to be about $10 million on revenue of about $300 million.
Delta Galil noted opportunities in the market for all three labels in its acquisition presentation. The two-year growth program for Seven for All Mankind mentioned store improvements, product innovation, supply chain efficiency and growth at wholesale for the 16-year-old premium denim brand. The immediate plans for Splendid and Ella Moss called for the expansion of Splendid men’s, closure of underperforming stores and build out of e-commerce among other tactics.