Tefron Ltd (NYSE:TFR), a producer of seamless intimate apparel, today announced that due to softness in demand from several of its US customers and the weakness of the Euro, the company expects revenues for the third and fourth quarters to range between $54m and $60m for each quarter.

On a preliminary basis, the company expects earnings for the third quarter to be significantly affected by the revenue reduction and could result in earnings for the third quarter in the area of breakeven. The company expects earnings for the fourth quarter to be higher than the third quarter level even if the level of revenue remains the same because of the company's ability to adjust its cost structure.

Sigi Rabinowicz, chief executive officer, said: "The weakness that we have been experiencing is coming from our larger existing programs. We intend to replace this reduced revenue by shifting sales to other existing customers as well as increasing sales from our newer products. We have already begun working closely with several of our customers, whose demand we had not previously been able to fully satisfy, in order to accelerate their plans and new product introductions using the available capacity.

"It will take several months to complete the design and production process with these customers, so we do not expect to be able to begin replacing the lost sales until early 2001. Furthermore, based on strong customer feedback, we have dedicated a portion of our capacity to the production of our second-generation bra so that shipments can begin in 2001. As a result of these initiatives, we expect to be producing at capacity again by mid 2001."

Mr Rabinowicz continued, "We are proceeding with our plans to shift our Tefron Division production to our Jordan facility where production costs are lower. We expect to begin to realize a favorable impact from the lower operating costs in Jordan during the fourth quarter of 2000, with these savings continuing to increase throughout 2001."

The company also announced that Nathan Pulwer has joined Tefron as its chief financial officer, replacing Micha Korman who will be assuming the position of executive vice president. Mr Pulwer has previously held senior management roles at several Israeli public companies including Comfy Interactive Movies Ltd and Marlaz Mishor Hachof Ltd and was a managing director at the Steinhardt Group in the US.

About Tefron
Tefron manufactures boutique-quality everyday seamless intimate apparel sold throughout the world by such name-brand marketers as Victoria's Secret, Gap, Banana Republic, DIM, Cacharel, Schiesser, Bhs, DKNY, Target and Nike, as well as three other well-known American designer labels. The company's product line includes knitted briefs, tank tops, loungewear, nightwear, bras, T-shirts and bodysuits, primarily for women.