Leading producer of seamless intimate apparel, Tefron Ltd, on Tuesday revealed it swung to a second quarter loss as it was hit by falling sales, unfavourable currency effects and restructuring charges.

The Bnei-Brak based firm, whose customers include Victoria's Secret, Gap, Target, Nike, JC Penney, Adidas and Kohls, posted a net loss the quarter ended June 30 of $1.1 million, or nine cents per diluted share, versus a net profit of $3.1m, or 25 cents a share, in the year prior.

Sales slumped to $40.9m from $49.7m while operating income plunged to $701,000 from $5.9m last year.

The company last year announced plans to consolidate Alba-Waldensian's production with Hi-Tex in Israel.

CEO Yos Shiran said: "These numbers resulted from a lower than originally expected sales level and higher than expected costs both primarily associated with the shifting of Alba's consumer division production from the US to Israel.

"In addition, the appreciation of the NIS against the USD since the end of the first quarter had a negative impact on the second quarter results.

"We expect that sales for the third quarter will be around $40m. This sales level reflects a temporary, but greater than expected, decrease in sales to the company's largest customer and a delay in the introduction of certain active wear programs."

He added: "We believe some of these negative effects will be reduced in the last quarter of the year, and this coupled with cost savings from the consolidation, should improve our operating results for the fourth quarter.

"We expect that sales will increase towards the end of the fourth quarter as a result of a growing demand from some of our customers and especially growing demand for our new active wear products."

Tefron's product line includes knitted briefs, bras, tank tops, loungewear, nightwear, T-shirts, bodysuits and active wear primarily for women.