Tefron Q2 net sales down by 18.3%

10 Aug '07

4 min read

Tefron Ltd a leading producer of seamless intimate apparel and engineered-for-performance active wear announced financial results for the second quarter of 2007.

As announced on April 27, 2006, Tefron closed the sale of its ownership interest in AlbaHealth. Accordingly, the financial statements of AlbaHealth are accounted for as discontinued operations, and the financial results described below do not include the financial results of AlbaHealth. Tefron ceased to consolidate the financial statements of AlbaHealth commencing April 27, 2006.

Second quarter revenues were $40.6 million, representing an 18.3% decrease from second quarter 2006 revenues of $49.7 million. The decrease in revenues in the quarter was due to a reduction in sales of active-wear and intimate apparel during the quarter. This reduction was partly offset by a slight increase in sales of swimwear.

Second quarter gross margin was 14.0%, compared with a gross margin of 21.7% in the second quarter of 2006. Operating income totaled $1.0 million (2.5% of revenues), compared with $6.6 million (13.4% of revenues) in the second quarter of 2006.

The decline in gross and operating margins in the second quarter was primarily due to the lower revenue and manufacturing levels in the quarter. In addition, the significant devaluation of the US Dollar versus the New Israeli Shekel, as well as the previously identified price reductions in older collections of Tefron's intimate apparel product line also impacted margins.

Income from continuing operations was $0.8 million (1.9% of revenues), or $0.04 per diluted share in the second quarter of 2007, compared to $4.5 million (9.1% of revenues), or $0.21 per diluted share, in the second quarter of 2006.

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