US retail stifles Delta Galil sales in second quarter

By

Obi Anyanwu

Published
Aug 16, 2016

Delta Galil experienced a challenging second quarter due to a turbulent US retail environment. The company expects the trend to continue into the third quarter though it can be offset by the other business segments and regions.

 
The regions could not offset the difficulties in the US however. Second quarter company sales fell slightly by 2% to $249.5 million from $255.5 million in the second quarter of 2015. For the first six months, sales decreased to $506.2 million from $508.4 million in the previous year’s comparable period.
 
Operating income dropped 7% in the second quarter to $13.5 million from $14.5 million and declined 5% in the first six months to $28.4 million from $29.8 million. EBITDA decreased 1% in the second quarter to $18.9 million and increased 1% in the first six months to $39.1 million.

Net income fell 16% to $7.8 million in the second quarter and decreased to $15.6 million, or $0.61 per diluted share, in the first six months of 2016 from $18.2 million, or $0.71 per diluted share. The second quarter decrease is due to higher depreciation expenses and an increase in tax on income expenses.
 
Delta Galil CEO Isaac Dabah believes that the company is poised for long-term profitable growth due to the company’s “…balanced blend of branded and private label products, an expanding global presence, and a range of market segments.”
 
Dabah added, “As part of our growth strategy, we announced during the quarter the acquisition of contemporary premium brands, including the businesses and brands of 7 For All Mankind, Splendid and Ella Moss from VF Corporation. We are now working to maximize the benefits these brands bring to Delta, as they further diversify our product offering and distribution channels, while adding significant strength to our structure.”
 
Delta Galil declared a dividend of $3.5 million, or $0.139 per share, to be distributed on September 6th, 2016. The company also expects to reach the lower end of its financial guidance for 2016.