Private label intimate apparel maker Delta Galil Industries Ltd today reported a 7 per cent decrease in first quarter sales, which it attributed to a "challenging economic environment, " particularly in North America.

However, sales to its largest customer, UK chain Marks & Spencer, increased 5 per cent in dollar terms to $37.6 million, mirroring the general recovery in the retailer's business overall.

Delta's North American sales to specialty and department stores dropped 17 per cent from $24.7 million to $29.6 million, a fall partially attributed to the loss of business to several retailers. Sales to Victoria's Secret decreased 6 per cent to $9.8 million.

Sales to the US mass market dropped 9 per cent to $39.8 million as sales to Kmart ceased in the first two months of 2002. Excluding sales to Kmart, the company says its US mass market sales grew by 2 per cent.

Total sales in the first quarter were $124.8 million. Net profit amounted to $1.8 million or $0.10 per share, a decrease of 37 per cent and 33 per cent respectively from the same period last year.

Dov Lautman, chairman of Delta, said the company is continuing to make strategic changes to its organisational structure. This will include a new managerial structure divided geographically, instead of by product category.