Tel Aviv - Delta Galil has swung to a profit in its third quarter, despite a drop in sales and the wider impact of the coronavirus pandemic.
The manufacturer and marketer of branded and private label apparel and innerwear posted net income of US$19.5 million, a 39 per cent increase compared to $14.0 million last year, and a sharp turnaround from a loss of $53.3 million in the 2020-second quarter. Sales were $382.9 million, compared to $446.1 million in the third quarter of 2019, a 14 per cent decrease associated with Covid-19 impact.
The company also announced the acquisition of leading US online retailer Bare Necessities, which enhanced Delta’s digital presence, while offering more than 160 brands and 6,400 styles in intimates, women’s swimwear, shapewear, sexy lingerie, sleepwear, and hosiery, among others.
Announcing the results Isaac Dabah, CEO of Delta Galil, said the return to profitability exceeded expectations. "Our results this quarter were driven by a strong performance in Delta European Brands and Delta Israel, coupled with initial benefits reaped from our strategic restructuring plan announced last quarter, as well as additional cost savings initiatives," he said. "Looking ahead, we continue our ongoing focus on driving innovation and excellence to deliver sustained profitable growth and long-term shareholder value. And, with a strong balance sheet, we have the necessary financial resources to continue to innovate and grow.”
Delta Galil noted that the disruption caused by COVID-19 and related business closures and public quarantine measures resulted in decreased sales volume, primarily with several major DGUSA and DGPB customers, and lower retails sales due to store closures, which were partially offset by higher web and e-commerce customer sales.
The impact of COVID-19 reduced third quarter sales was approximately $60 million, while the impact on EBIT was negligible.
As previously stated, Delta Galil is not providing financial guidance for fiscal 2020, as a result of the global impact of COVID-19 and the continued uncertainty surrounding the pandemic. Nevertheless, the company estimates that its operating results will maintain profitability in Q4 of this year.