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Slight increase in sales of Tefron swimwear

25
Aug '09
Tefron Ltd announced financial results for the second quarter of 2009. Second quarter revenues were $25.3 million, representing a 48.1% decrease from the second quarter of 2008 revenues of $48.6 million. The decrease in revenues in the quarter was due to a decrease in sales in all the Company's product lines, primarily due to the worldwide economic slowdown.

The Company reported a gross loss in the quarter of $1.6 million, compared with a gross profit of $4.0 million in the second quarter of 2008. Operating loss for the quarter was $5.7 million, as compared with an operating loss of $1.6 million in the second quarter of 2008. Net loss for the quarter was $4.6 million, or $2.2 loss per diluted share, as compared with net loss of $2.2 million, or $1.0 per diluted share, in the second quarter of 2008.

The decline in gross and operating margins in the quarter compared with the second quarter of 2008 was primarily due to the significant decline in revenues which exceeded the corresponding decline in our fixed expenses, that resulted from the implementation of our efficiency plan and the devaluation of the US Dollar versus the New Israeli Shekel.

Revenues in the first half of 2009 were $72.2 million, representing a 27.5% decrease from first half of 2008 revenues of $99.6 million. The decrease in revenues was due to a decrease in sales of both the active-wear and intimate apparel product lines. This decrease was partly offset by a slight increase in sales of swimwear, due to an initial sales to new customer.

The 2009 first half gross margin was $3.9 million compared to a gross margin of $10.5 in the first half of 2008. Operating loss was $6.0 million compared to an operating loss of $1.3 million in the first half of 2008. Net loss was $4.5 million, or $2.1 loss per diluted share, compared with net loss of $2.8 million, or $1.3 per diluted share, in the first half of 2008. These decreases in margins were due to the significant decline in sales, which exceeded the corresponding decline in our fixed expenses, that resulted from the implementation of our efficiency plan and due to maintenance costs associated with new sales offices that we opened in 2009.

Restatement of first quarter 2009 results

The Company also announced that it is restating its financial results for the first quarter of 2009 due to a failure to record purchasing expenses in the amount of $653 thousand in connection with one sale made by the Company's subsidiary, Macro Clothing Ltd..

The net effect of the required adjustment due to this error reduces the Company's net income for the three months ended March 31, 2009 by $488 thousand. This error has no effect on the net loss for the six months ended June 30, 2009.

Tefron manufactures boutique-quality everyday seamless intimate apparel, active wear and swimwear sold throughout the world by such name-brand marketers as Victoria's Secret, Nike, Target, The Gap, J.C. Penney, Maidenform, lululemon Athletica, Warnaco/Calvin Klein, Patagonia, Reebok, Swimwear Anywhere, Abercombie&Fitch, and El Corte Englese, as well as other well known retailers and designer labels. The company's product line includes knitted briefs, bras, tank tops, boxers, leggings, crop, T-shirts, nightwear, bodysuits, swimwear, beach wear and active-wear.

Tefron Ltd


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