Delta Galil optimistic despite Q2 declines
- Q2 net income dropped to US$7.8m from $9.3m
- Sales fell 2% to $249.5m
- New factories in Vietnam are "on track"
Celebrating its 40th anniversary this year, Delta Galil has unveiled a new image and logo
Israel-based lingerie, underwear and activewear manufacturer Delta Galil Industries has offered an optimistic outlook and reaffirmed its growth plans despite reporting lower earnings and sales in its second-quarter.
Net income in the three months to the end of June dropped to US$7.8m from earnings of $9.3m in the year ago period. The decline was attributable to higher depreciation expenses and an increase in tax on income expenses compared to the same period last year.
Sales amounted to $249.5m, a fall of 2% to $255.5m as a result of a softer topline performance in the US market, offset by stronger sales in regions such as Europe and Israel.
"While we experienced a challenging US retail environment in the second quarter, which is expected to continue into the third quarter, this was partially offset by improvements in all of our other business segments and regions, reflecting the strength of our diversified business model," said CEO Isaac Dabah.
The company says it is on track to launch new factories in Vietnam, with Seamfree and Cut & Sew factories opening in the fourth quarter of 2016, and a socks factory in the first quarter of 2017. Delta Galil is also focused on growing its e-commerce business.
Despite this, and reflecting the continuing soft market in the US, the company is expecting to meet the lower end of its previously stated guidance range.
It is also working to maximise the benefits of the 7 For All Mankind, Splendid and Ella Moss brands that it is acquiring from VF Corporation in a $120m deal. "They further diversify our product offering and distribution channels, while adding significant strength to our structure," Dabah adds.
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