Delta Galil: Sales Rise, Closes China Factory

Delta Galil second quarter net income fell 16.9% to $22.661 million as sales rose 7.8% to $491.251 million. Earnings were impacted by expenses related to the company’s closing of a China factory as it moved some production to Vietnam.

In the same period last year the Delta Galil earned $27.270 million on sales of $455.771 million. It explained that “in constant dollars, second quarter sales increased 11% from the prior-year period,” adding that “record second-quarter sales were driven primarily by strong growth within the company’s private label segment.”

E-commerce sales at Delta Galil continue to slide. “Own website sales in the second quarter of 2022 declined 15% to $53.7 million, compared to $63.4 million in the prior-year period, following a shift in consumer behavior back to physical retail locations as stores reopened after covid-19 related lockdowns. Own website sales in the first half of 2022 declined 19% to $108.5 million, compared to $134.1 million in the prior-year period. Excluding Bare Necessities, which was acquired in October 2020, own website sales in the second quarter and first half of 2022 increased by 93% and 100%, respectively, compared to the same periods in 2019."

Delta Galil explained it is “focused on realigning its manufacturing footprint to improve production flexibility and efficiencies while reducing its manufacturing presence in China. As a result, during the second quarter of 2022, the company ceased operations at Bogart’s Shenzhen Factory and moved its operating activity to a new factory in Vietnam. The company recorded a $5.5 million expense during the second quarter of 2022 associated with employee severance and related costs.”

Delta Galil acquired The Bogart Group, including its lace and padding subsidiaries, in mid 2019, noting at the time that the lingerie and swim manufacturer had “consolidated sales of $230 million in 2018,” and was “a preferred strategic partner” for various brands including Victoria’s Secret, PVH, Jockey, Adore Me, Vanity Fair and Hanes, among others.

Looking ahead at the full year, Delta Galil said it projecting a sales increase of 7% to 8% (to $2.082 billion to $2.108 billion) over sales in 2021 of $1.951 billion. Net income is expected to increase 11% to 17%, or from $138 million to $145 million, compared to $124.2 million last year. — NM