Active-wear & swimwear sales up at Tefron
Tefron Ltd announced financial results for the third quarter of 2008. Third quarter revenues were $38.3 million, representing a 26.1% increase from the third quarter of 2007 revenues of $30.3 million. The increase in revenues in the quarter was due to an increase in sales across all the Company's product lines, particularly active-wear and intimate apparel.
The company reported a gross loss in the quarter of $1.7 million compared to a gross profit of $2.4 million in the third quarter of 2007. Operating loss for the quarter was $6.8 million, as compared with an operating loss of $1.5 million in the third quarter of 2007. Net loss for the quarter was $5.6 million, or $0.26 loss per diluted share, as compared with a net loss of $1.7 million, or $0.08 per diluted share, in the third quarter of 2007.
The main reasons for the loss are (i) the significant devaluation of the US Dollar versus the New Israeli Shekel, amounting to $2.7 million additional expenses compared with third quarter 2007, and (ii) the manufacturing challenges that we have not been overcome yet in the Hi-Tex division. In addition, the Company wrote down $2.2 million in inventory, due to the difficulty of selling older collections in the current weak economic environment.
Revenues in the first nine months of 2008 were $137.9 million, representing a 15.2% increase from revenues of $119.7 million generated during the first nine months of 2007. The increase in revenue was due to an increase in year-over-year sales across all product lines including active-wear, swimwear and intimate apparel.
Gross profit in the first nine months of 2008 was $8.4 million compared with $17.4 million in the first nine months of 2007. Operating loss was $8.7 million compared with an operating income of $4.5 million in the first nine months of 2007. Net loss was $8.8 million, or $0.41 per diluted share, compared to a net income of $2.9 million or $0.13 per diluted share in the first nine months of 2007. The decline in profitability was due to increased costs, in particular the manufacturing challenges faced in the Hi-Tex division as well as the significant devaluation of the US Dollar versus the New Israeli Shekel compared with the same period last year.
Due to Tefron's current share price, Tefron is not in compliance under the continuing listing requirements of the New York Stock Exchange. The Company is currently reviewing various alternatives in order to regain compliance.
Mr. Adi Livneh, Chief Executive Officer of Tefron, commented, "I joined Tefron in September, at the end of a very tough quarter. In my first months here, I have already taken a number of steps including far-reaching structural changes at Tefron, as well as the replacement of some senior personnel with highly experienced industry executives. I believe these are steps in the right direction, which will enable us to resolve the current challenges. Our goal is to improve the quality of our manufacturing, more efficiently exploit our inventory, while lowering wastage and saving costs with the goal of returning Tefron to profitability in the coming quarters."