Troubled Delta Galil gets new CEO

Delta, which manufactures apparel for Calvin Klein, Nike, and Ralph Lauren, has had a terrible 2005 due to a decline in selling prices to customers in Europe and the US that has cost the company approximately $40m.

By YIGAL GRAYEFF
December 28, 2005 07:19
2 minute read.
delta galil logo 88

delta galil logo 88. (photo credit: )

 
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Dov Lautman, founder and chairman of ailing clothing maker Delta Galil Industries, will take over the position of chief executive from Arnon Tiberg who is resigning from the company. In a telephone interview on Tuesday, Lautman didn't give a reason for Tiberg's departure but did say that it wasn't due to the losses the company has suffered this year. "Tiberg has been CEO for nine-and-a-half years and has said that he wants to resign," was all Lautman said on the matter to The Jerusalem Post. Tiberg couldn't be reached for comment by press time. Lautman will start his new job in February and will serve for 12 months, although the board of directors will ask shareholders to approve a 15-month term at a meeting that is being convened to authorize Lautman to serve as chairman and chief executive at the same time, as required under Israeli law. "I will serve as the CEO for a year, after which I hope we can appoint someone from inside the company," Lautman said. Delta, which manufactures apparel for Calvin Klein, Hugo Boss, Nike, and Ralph Lauren, has had a terrible 2005 due to a decline in selling prices to customers in Europe and the US that has cost the company approximately $40m. In the first nine months of 2005, the company swung to a net loss of $28.7m. from a profit of $12.m. a year earlier despite sales increasing 6% to $514.3m. To reverse its losses, Delta is carrying out a worldwide reorganization that includes cutting 1,300 jobs in Central America and 500 in Israel. Lautman will now oversee the restructuring, which will continue until the third quarter of 2006. "In this period, when Delta is in the midst of a reorganization, it is important that the person leading the company be a person who understands the company well," Lautman said. Benny Sharvit, head of research at Gaon Investment House, wasn't convinced the appointment would give the company the boost it needs. "I'm not sure that the situation is better. If they had brought in a new CEO with different ideas and who has experience in the textile industry, then that would have been one thing," he said. "What will Lautman do as CEO that he hasn't done until now as chairman? It's a strange appointment." Sharvit said "the market is not buying this story either." Shares closed down 1% at NIS 28.50 on the Tel Aviv Stock Exchange and were down 1% at $6.21 in morning trading on the Nasdaq. Relations between Lautman and Tiberg appear to remain good - Lautman would like Tiberg to become a director of the company.

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