Weak US sales are still affecting textile company Delta Galil Industries Ltd. (Pink Sheet: DELTY; TASE: DELT). The company posted $297 million in revenue in the third quarter of 2016, 4% more than in the corresponding quarter last year. At the same time, these sales included $29 million from new business acquired in late August - Delta Premium Brands.
Excluding this new business (and another acquisition only partly consolidated in the third quarter of 2015), sales were down 6% (in organic terms), compared with the corresponding quarter last year.
Revenue was down 8% to $158 million in the US. Excluding the acquired business, however, the decline was 22% in organic terms. On the other hand, sales in German grew 11% to $44 million in the third quarter, while sales in other European countries were up 19% to $48 million. In late August this year, Delta Galil completed the acquisition of three premium brands from US company VF: the For Mankind 7 global jeans brand, and Splendid and Ella Moss, two upmarket US brands. These brands will now be called Delta Premium Brands. The acquisition cost $119 million, but in the company books, it added a $10 million profit from an "acquisition opportunity."
Net profit was $17.7 million in the third quarter of 2016, compared with $13.4 million in the same quarter last year, up 31%. Diluted earnings per share were $0.69 for the 2016 third quarter, compared with $0.52 for the same quarter last year.
For the first nine months of 2016, net profit was $33.3 million, or $1.30 per diluted share, compared with $31.7 million or $1.23 per diluted share for the same period of 2015.
Isaac Dabah, CEO of Delta Galil, said: "Our third quarter results demonstrate the strength of our business model, which is built on a diverse portfolio of branded and private label products, an expanding global presence, and a range of market segments that, together, provide both growth momentum and balance. We saw a strong contribution from our recent addition of DG Premium Brands, which includes 7 For All Mankind, Splendid and Ella Moss, and despite the expected soft US market, we experienced strong growth in Europe and Israel.
"During the quarter, we focused on consolidating Premium Brands into our business, while taking important measures and implementing the necessary efficiencies to both streamline and strengthen the brands to best position them for growth. Also during the quarter, we appointed retail and fashion leader Paula Schneider, who is renowned for building profitable businesses and improving efficiencies for contemporary brands, to oversee this business and execute our ambitious goals for these brands."
"Looking ahead, in addition to maximizing the benefits of this new acquisition, we expect our new Vietnamese factory to contribute to our growth beginning in 2017, and we are on track to open our new Seamfree and Cut & Sew factories in the fourth quarter."
<p><i>Published by Globes [online], Israel business news - <a href=http://www.globes-online.com>www.globes-online.com</a> - on November 16, 2016</i>
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