NEW YORK — A soft North American sales environment coupled with the company’s decision to reduce its customer load caused the earnings of Delta Galil Industries Ltd. to fall in the third quarter.
This story first appeared in the November 10, 2003 issue of WWD. Subscribe Today.
For the three months ended Sept. 30, the Tel Aviv-based intimate apparel manufacturer saw earnings recede 9.4 percent to $6 million, or 32 cents a share, against $6.6 million, or 35 cents, in last year’s quarter.
Revenue for the period slipped 2.1 percent to $148.7 million compared with $151.9 million last year.
Hampering results for the quarter were slumping North American sales, which slid 9 percent to $78.4 million from $86.4 million. The region accounts for over 50 percent of the company’s business.
Sales to specialty and department stores in particular weighed heavily on results, plunging 26 percent to $19.5 million during the quarter, compared with $26.5 million last year. For the nine- month period sales were down 24 percent to $58.1 million against $76.5 million last year.
Arnon Tiberg, chief executive officer, said in a statement the declines were “partially attributed to Delta’s decision to reduce its number of customers as well as general weakness in this part of the market.”
Delta’s acquisition of Auburn Hosiery Mills from the Kellwood Co., announced in late October, should give sales figures a shot in the arm going forward. Auburn, a leading sock manufacturer, recorded revenues of $59 million in 2002, $35 million of which came from sock sales to Wal-Mart. Delta sold $86 million in socks in 2002 and already counts Wal-Mart as its second-largest customer worldwide. The transaction is expected to be finalized this month.
Meanwhile, the U.S. subsidiary of the company has signed a licensing agreement to manufacture daywear and sleepwear bearing the Extra Fancy and Bobbypin by Jeffrey Fulvimari brands. Fulvimari, a designer and illustrator, has appeared in several Calvin Klein ad campaigns as a spokesmodel, and has worked on projects with designers such as Anna Sui and Helmut Lang. He also is the illustrator of Madonna’s first children’s book, “The English Roses.”
“When we originally viewed Jeffrey’s portfolio of work we knew there was something special that we needed to be a part of,” said Zack Salino, vice president of marketing at Delta Galil USA. “When we present these collections people get it. We have shown products to consumers and they identify with the images in the illustrations. It creates an immediate emotional connection.”
The company also announced a dividend distribution of $2.4 million, or 13 cents a share, payable to shareholders of record on Nov. 11.
For the nine months, earnings were up 59.4 percent to $18.7 million, or $1 a share, from $11.7 million, or 62 cents, last year. Revenues increased 4.6 percent to $426.6 million from $407.9 million.