Delta Galil has signed an agreement to acquire the Eminence Group.
The Eminence Group, which has the number-two market share in France, includes Eminence, a premium underwear brand for men, along with Athena and Liabel, mass-market underwear brands for men, women and kids. The transaction is expected to close in the third quarter of the year.
According to Isaac Dabah, Delta Galil’s chief executive officer, this move will help build out Delta Galil’s presence in Europe including France, with the country accounting for less than 1 percent of its business.
“This allows us to expand our European footprint in the branded part of the business,” said Dabah. “The Eminence Group has been a very consistent, profitable business for the last five to six years and it’s growing. We found that there were a lot of synergies between the companies.”
Eminence Group’s net sales totaled approximately 99 million euros in 2017 and 87 percent of its products are for men, with 8 percent targeting women and 5 percent for kids and babies. Almost 80 percent of sales come from the French market and 17 percent come from Italy with the remaining 3 percent coming from Belgium. The senior management will remain on staff.
Dabah said the goal is to focus on improving the business in Europe and Italy and sell it into Spain. Because the U.S. is such a competitive market, there are no immediate plans to introduce these European brands Stateside. Dabah also wants to focus on the group’s e-commerce efforts.
While Dabah said Delta Galil always has its eyes open for future acquisitions, he doesn’t consider the company an acquisitions-focused business, although they have helped. Delta Galil’s sales last year set a company record and it’s looking to only increase the growth rate, as well as profitability.
For the year ended Dec. 31, Israel-based Delta increased overall sales by 16 percent to $1.37 billion from $1.18 billion in 2016, and profits dipped slightly to $48.96 million from $51.9 million. Dabah attributed this to the mid-2016 acquisition of Splendid, Ella Moss and Seven from VF Corp.
Dabah admits that the U.S. market has been challenging, but he believes opportunities are opening up.
“The U.S. is overstored, but overall, the U.S. has had a reduction in brick-and-mortar over the last three years,” said Dabah. “Overall, we have been able to avoid the ups and downs of the market because we also manufacture. But Europe is up-trending a little bit and we aren’t big players in Asia or South America as of yet, so there are opportunities there.”