Delta Galil sales and shares positive impacted by Premium Brands acquisition

By

Obi Anyanwu

Published
Nov 16, 2016

Delta Galil’s recently acquired Premium Brands segment positively impacted the company’s third quarter results. The company released its quarterly results on Wednesday, which included increases in sales and net profit due in part to the acquisition of the 7 For All Mankind, Splendid and Ella Moss brands from VF Corp.

 
Third quarter sales increased 4% to $296.6 million from $284.6 million with Premium Brands contributing $28.9 million. Operating profit increased 16% to $24.6 million from $21.2 million and operating cash flow increased to $12.6 million from $5.9 million.
 
Isaac Dabah, CEO of Delta Galil, stated: “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 U.S. 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.”

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Delta Galil also hired former American Apparel CEO Paula Schneider as CEO of DG Premium Brands to oversee the newly acquired brands. Schneider left American Apparel shortly before it filed for its second Chapter 11 bankruptcy.
 
Third quarter EBITDA was reported to be $28.7 million, or 9.7% of sales, compared to $27.1 million in the prior year’s third quarter, and net income increased to $17.7 million from $13.4 million. Net financial debt expanded to $223.8 million from $123.5 million due primarily to the acquisition of Premium Brands.
 
For the nine months ended on September 30, 2016, sales increased to $802.8 million from $792.9 million, operating income increased to $53.0 million from $51.0 million, and net income increased to $33.3 million, or $1.30 per diluted share, from $31.7 million, or $1.23 per diluted share.
 
Dabah added, “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. With a strong balance sheet to support our long-term growth and acquisition strategy, we are also focused on growing our e-commerce business, and we are working to attain double digit EBIT growth in 2017 and beyond.”