Tefron Ltd, one of the world's leading producers of seamless intimate apparel, today reported a 21.4 per cent drop in third quarter sales to $39.4 million, compared to sales of $50.1 million for the third quarter of 2002.

Operating income for the third quarter ended 30 September 2003 was $47,000 compared to an operating income of $6.0 million for the same quarter last year.

The company's net loss of $1.1 million, or $0.09 per diluted share, is partly blamed on a capital loss of $1.8 million associated with its sale of 52 per cent of Alba-Waldensian's Health Products Division.

Yos Shiran, chief executive officer, said sales for the quarter were in line with expectations.

He added: "We expect sales for the fourth quarter to improve to around $42 million. We also expect to report improved results in the fourth quarter."

Sales for the first nine months of 2003 were $122.7 million, compared to sales of $139.9 million in the same period of 2002. Operating income for the first three quarters of the year was $4.0 million, compared to $14.7 million last year.

Net loss for the first nine months of 2003 was $1.3 million compared to a net loss of $14 million for the first nine months of 2002.

Looking ahead, Shiran said: "We are cautiously optimistic about the company's prospects for 2004 and currently expect a mid teen growth in sales in 2004.

"Active wear is becoming an increasingly important part of our business and we anticipate an expansion in sales of this product line to our active wear customers next year. We also continue to make inroads with our mass-market customers and expect sales growth in this distribution channel during 2004."