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November 20, 2018

Delta Galil sees bright outlook on strong Q3 sales

Israeli apparel major Delta Galil Industries has raised its full-year outlook, following a strong third-quarter in which successful US launches for Costco and new kids businesses helped drive a 9% increase in sales.

By Beth Wright

Israeli apparel major Delta Galil Industries has raised its full-year outlook, following a strong third-quarter in which successful US launches for Costco and new kids businesses helped drive a 9% increase in sales.

For the three months to the end of September, net income before one-time items increased 15% to $16.6m, from $14.5m a year earlier. However, including acquisition-related and restructuring costs of US$7m, net income was down 33% to $9.6m. Delta Galil bought French premium undergarment maker Eminence Group in May last year, with the deal completing earlier than expected in July 2018.

The company, which makes branded and private label apparel products for men, women and children, as well as leisurewear, activewear and denim, reported sales of $370.8m for the quarter, a 9% increase from $340.3m last year. The sales growth reflected strength in Delta Galil USA, Delta European Brands (now including Eminence) and Delta Israel.

“During the quarter, we focused on consolidating Eminence Group, which made a strong contribution to sales in its first quarter as part of Delta Galil, while expanding our European presence,” said CEO Isaac Dabah.

Also during the quarter, the company signed a global licensing agreement to exclusively develop, produce and distribute Ted Baker men’s underwear, loungewear, and thermal wear worldwide, with the first collection launching spring 2019. “This represents an important step in our ongoing strategy to grow our global portfolio of premium brands,” he said.

Looking ahead, the group has updated its financial guidance for 2018 and now expects full-year 2018 sales to range between $1.48bn and $1.5bn, representing an increase of 8%-9% from 2017 actual sales of $1.37bn. Diluted EPS is expected to range between $2.23-$2.34, representing an increase of 12%-18% from 2017 actual EPS of $1.98.

“We see significant opportunities, including potential corporate initiatives to sell to key online retailers, and the ability to introduce core Delta products through Eminence distribution channels,” Dabah added. “Further, the investments we made in our manufacturing facilities will start having positive impacts on our bottom line towards 2019.”

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