Seamless intimate apparel producer posts Q4 2007 results

29 Mar '08

3 min read

Tefron Ltd announced financial results for the fourth quarter and full year 2007. Fourth quarter revenues were $38.9 million, representing a 22.2% decrease from fourth quarter of 2006 revenues of $50.0 million. The decrease in revenues in the quarter was due to a reduction in sales of active-wear products, primarily to Nike, a reduction in sales of intimate apparel, mainly to Victoria's Secret for older Cut & Sew collections and lower sales of swimwear, mainly due to the delay of some swimwear revenues to the first quarter of 2008.

Fourth quarter gross margin was 5.4% compared with a gross margin of 22.2% in the fourth quarter of 2006. Operating loss for the quarter was $2.8 million, as compared with an operating income of $6.4 million (12.9% of revenues) in the fourth quarter of 2006. Net loss for the quarter was $2.4 million, or $0.11 per diluted share as compared with net income of $4.7 million (9.3% of revenues), or $0.22 per diluted share, in the fourth quarter of 2006.

The decline in gross margin and the operating loss in the quarter were primarily due to the lower revenue and manufacturing levels, increased costs due to factors described below and a one-time inventory write-off of approximately $0.7 million related to obsolete inventory.

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 continued to impact margins. Additionally, the higher proportion of Cut & Sew 'new generation' products in the sales mix for Nike, which have a lower

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