“This transaction reflects our strategic growth objective to diversify our distribution channels,” Isaac Dabah, chief executive officer of Delta Galil, said in a statement. “As the digital space currently represents the fastest-growing segment in our industry, we are very pleased to acquire such an authority in online intimates. Bare Necessities can significantly enhance Delta Galil’s presence in the digital world, as we continue to pursue growth online. I look forward to partnering with the senior leadership of Bare Necessities to achieve strong, profitable growth.”
Like most retailers, the coronavirus pandemic and subsequent shutdown has left Delta Galil reeling from the aftermath. (The company — which houses the Seven For All Mankind, Splendid, Schiesser, Eminence, Delta, P.J. Salvage, Karen Neuburger, Nearly Nude and Fix brands in its greater portfolio — lost more than $53 million in the most recent quarter, compared with profits of $5.1 million a year earlier.)
But there were a few bright spots, like the company’s digital businesses. Sales increased 163 percent year-over-year along Delta Galil’s own online platforms during the quarter. The company has also benefited from the booming ath-leisure market.
That could be why as recently as February — when the pandemic was still in full force around much of Asia — Dabah said Delta Galil intended to continue expanding globally.
Plans include increased investments in Brayola, the New York City-based online bra business, which Delta Galil acquired earlier this year for more than $1 million, in addition to expanding The Bogart Group’s product assortment, the lingerie, swimwear and activewear manufacturer that Delta Galil acquired in July 2019.
Meanwhile, the deal with New York City-based Bare Necessities is expected to close in the next few weeks and be accretive to next year’s earnings, the company said. Bare Necessities, which was founded in 1998, was acquired by Walmart U.S. e-commerce in October 2018. The platform sells more than 160 brands across the intimates, lingerie, swimwear, shapewear and sleepwear categories, names like Spanx, Wacoal, Calvin Klein and Chantelle. Following the acquisition, Delta Galil’s own intimate brands will be featured on Bare Necessities’ e-commerce site.
The sale by Walmart represents a further unwinding of the shopping spree the world’s largest retailer undertook a few years ago as it scurried to close the online shopping gap with Amazon. During that time Walmart snapped up Bonobos, Jet.com, Modcloth, Bare Necessities and plus-sized brand Eloquii as it scurried to expand its online offerings. But it sold Modcloth last year, and scaled back its expansion plans for Jet while there continues to be speculation it might look to sell Bonobos, whose founder Andy Dunn left Walmart earlier this year. This shift in strategy comes as Walmart’s core digital sales continue to skyrocket, especially during the pandemic, as the retailer better integrates its brick-and-mortar and online operations.
Shares of Delta Galil shot up nearly 18 percent on Tuesday to close at $51.70.