Delta Galil Industries Ltd. battled currency headwinds to finish the first quarter with increases on both the top and bottom lines.
In the three months ended March 31, the Tel Aviv-based marketer of innerwear, activewear and other apparel products recorded net income of $8.9 million, or 35 cents a diluted share, 1.6 percent above the $8.7 million, or 34 cents, registered during the comparable 2014 period.
Net sales increased 6.2 percent, to $252.8 million from $238.1 million, and were up 13 percent at constant currency. Gross margin receded to 28.8 percent of sales from 30.4 percent a year ago as cost of sales grew 8.7 percent, more rapidly than revenues.
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“The strongest contributors to our sales growth globally have been North America, Germany and Israel,” said Isaac Dabah, chief executive officer. “Branded products continue to contribute a larger proportion of our sales, reflecting our strategy to grow this aspect of our business in recent years.”
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Delta USA sales advanced 22 percent to $111.7 million in the quarter, while Delta Israel’s were up 7 percent to $28 million. Schiesser, the German underwear brand acquired in 2012, declined 8 percent to $48.6 million, but without the strengthening of the dollar against the euro would have risen 12 percent.
Dabah added that Delta has benefited from its focus on activewear, “which is one of the fastest-growing segments of the apparel industry and where our strengths in seamless products and innovative fabrics provide Delta Galil with a sharp competitive edge.”
Delta is looking to take advantage of that positioning. It’s opened a seamless research and development center at Nike’s headquarters in Oregon and has a design and manufacturing agreement with Asics.
In the next year, it plans to complete the acquisition of a new dye house in Egypt and open a new factory in Vietnam.
It will also invest in Schiesser stores in Germany and in its network of stores in Israel.