Seamless intimate apparel and activewear maker Tefron Ltd has swung to a third quarter loss on lower sales to Nike and Victoria's Secret coupled with manufacturing problems in its Hi-Tex division.

Net loss for the quarter was $1.7m, or $0.08 per share, compared with a net income of $3.9m, or $0.18 per share, in the third quarter of 2006.

Third quarter revenues at the company, whose customers include Target, Gap, Warnaco/Calvin Klein, and Reebok, fell 22.2% to $30.3m to $39.0m.

Gross margin fell to 7.8 from 23.3% in the third quarter of 2006, and the company posted an operating loss of $1.5m compared with an operating income of $5.3m last time.

For the first nine months of 2007, net income was $2.9m, or $0.13 per share, compared with $13.7m, or $0.66 per diluted share, in the same period last year. Revenues fell 13.3% to $119.7m from $138.1m.

Mr Yos Shiran, chief executive officer, described the third quarter as "tough."

He added that while the company expects to see improved fourth quarter revenues of around $40m, "we will record an operating and net loss."
Activewear sales in the first quarter of next year are due to receive a boost from Nike's 'new generation'of performance apparel products, and sales to Lululemon. The swimwear division is also expected to increase sales in the European market.

Mr Shiran said the company is working to develop new, advanced products and increase activewear sales, as well as exploring ways to improve manufacturing efficiencies and cut costs.

Tefron has also pulled the plug on a seamless underwear joint venture in China "due to lack of progress with the Chinese partner." The joint venture with Langsha Knitting Co Ltd and Itochu Corporation was announced in May 2006.