In May 2008, about a year after acquiring control over Delta-Galil, in an interview with “Calcalist”, Isaac Dabah said this: “Dov Lautman, Delta’s founder, took care of his employees. We’re going to take care of our shareholders, as well”. For Lautman, Delta-Galil was family, for Dabah it’s a business. Today, a year and a day after Lautman’s passing, Dabah has climbed 2 spots from the 2013 CEO rating and conquered the top of the Calcalist and Israeli senior business community’s best CEOs chart.
Dabah has turned Delta-Galil into a global company that is able to manufacture anywhere in the world, as long as it proves to be profitable. This pragmatic take applied by Delta-Galil’s CEO is what enabled the company’s survival through hard times and even more – it has turned the company from one that was losing 26.4 Million-dollars in 2008, to a company that has listed a 42.6 Million-dollars profit in 2013. Six years after stating he will take good care of the shareholders, Dabah also won their appreciation.
“It was a week full of crazy flights”, Isaac Dabah tells of his “meeting marathon” that have taken place in four continents. “On Saturday night I left New-York, on Monday I arrived to Hong-Kong, on Monday night I was already on a flight to India, and on Tuesday evening left India to go to Madrid, for a meeting that was on Wednesday. From there I flew to a meeting in Milan, and left there early to make it back in time to spend the weekend in New-York with my family”.
Dabah (54), has brought this “meeting marathon” drill to perfection during his seven years as Delta Galil’s CEO. The frantic pace only grew more frantic due to the company’s growth in Europe and the US, and became more extreme as the search for new markets and companies to acquire extended to India and Brazil. His sense of stability is aided by his wristwatch, which is always set to the time in his hometown, New York.
Another support factor keeping him grounded and sane through this hectic lifestyle is the support of his wife – Ivettte, Dabah tells the Calcalist reporter: “She’s something special. When it’s difficult for me to make it home for the weekend, instead of saying ’come home, how much can one man work?!’ she says ‘don’t overstress yourself, do what you have to do’. That really helps me do what I need to do. She knows how important it is to work hard to get to something.
It’s very important to have a good spouse. I don’t know how people can concentrate on work when they have trouble at home. I am a lucky man”.
If Dov Lautman, who founded Delta Galil in 1975, is a remarkable example of how to build an Israeli industry from scratch, Isaac Dabah is a remarkable example of how to take that industry when it’s in trouble and turn it around.
Dabah has implemented organizational changes as soon as he entered the position. He reduced production, made it more efficient, initiated budget cuts and signed more manufacturing contracts with larger brands. As of today, Delta Galil develops, designs and manufactures clothes for a number of successful international brands, including Victoria’s Secret, Calvin Klein, Nike and Tommy Hilfiger. Delta Galil even has franchising agreements and markets the clothes of certain brands Such as Lacoste, Marc Opolo, Kenneth Cole and Columbia, among others.
This year, the company had the 20th consecutive quarter of growth, and the stock value rose in about 2,500% since 2008, with a rise of almost 20% this past year alone. “To keep an organization growing is difficult”, Isaac says, “There’s a need to constantly bring new, more innovative products, to think outside the box, but we’re also looking for an acquisition to help Delta grow, maybe in the sportswear field, active-wear, that’s the dream. I’m not 100% pleased yet. The stock is selling for 75% of sales net-worth.
We sell for a Billion dollars, and the company is traded for 750 Million. Our goal is to triple sales within 3 to 5 years. We want to be one of the ten large multinational companies in the field”.
Dabah mentions the names of international moguls such as VF Corp; owner of the Levi’s Jeans brand, and Timberland; whose annual turnover can reach 12 Billion dollars a year.
“We haven’t issued on NASDAQ yet because we don’t need the money at the moment. By the end of this year, we will have maybe 200 Million dollars in the bank. I plan to issue the company and “thin out” stocks after we make an acquisition. It’s important for me to establish a management team for the company, so I can reach the point of issuing with the best directors on the job. In January, Maurice Reznik, former CEO of Maidenform, will replace me as the head of Delta USA and manage Delta Galil in the United States.”
“The European market is not in great condition, but I don’t think it will go any lower than it is at the moment. It will either stabilize, or improve a little. The American market is growing. We now have to grow in Brazil or India. India, where we buy cotton for a low price, is the second largest market in the world, and we do not have even one business there. We want to be there [India] or in Brazil in 2015. We will be there. Maybe through a partnership with someone local, or by purchasing 60% of a local company. It’s a business model we haven’t tried yet, but it seems this is what it takes to break into these markets. From India one can sell to Sri-Lanka, Thailand, Indonesia – which is a big Muslim market that isn’t well known in Israel. It’s hard to enter the Chinese market without a big brand name. We wanted to expand into Russia as well, but now, when it’s headed for recession, the prices are up by 40% and the shopping decreased, so we’re not going to go there”.
Dabah’s parents have immigrated to Israel from Syria and lived in Jerusalem. At the age of 12, his parents left Israel to New York. At his twenties, he joined his father’s fabric import business. The wealth came in 1988, following the purchase in the sum of 15 million $ of Gloria Vanderblit Jeans, which was on its way to chapter 11. In less than a decade, Dabah sold the company in more than100 million $. It took a few years until Isaac Dabah started investing in Israeli firms, Delta Galil was one of them. At a certain point he purchased 23% of the shares from Sara Lee Corporation. In 2007 he purchased 13% of the Company from Dov Lautman, making him the main shareholder. He bought the shares as he felt that he has no choice. “There were many problems at Delta.
The former CEO has resigned after he was not given the OK to make the reforms he thought should be done. Dov, who was already ill, took the CEO role for a year and wanted to sell his shares. He managed the Company his way and it was hard to make major changes. He really tried everything possible. Even when it was hard for him to fly, he came with his assistant to NY to work. I knew he wanted to sell his shares and I was worried that if he brings another CEO I would lose all I have invested. That’s why I ended up purchasing most of his shares, making me the main shareholder and enabling me to take control and lead this ship to safe harbor.
Dabah remembers well the moment he thought the acquisition was the biggest mistake he made. “A year and a half after I got into the Company, Delta showed great loss. Sara Lee shares, that I bought in 2005 in 6.5 dollar a share, went down in 2008 to around $1 a share. If I would have waited I would have bought the Company in 20-30 million dollars instead of 100 million. I am not the type who checks the share value on a daily basis, but that time was difficult. I thought I lost it all. I thought the world was coming down on me. In 2007, on the first meeting I had with Delta’s management I told them: ‘a public company needs to have consecutive growth. Each quarter. We need to do innovation and it will create the growth.’ Under my leadership the culture of the Company has changed; our executives are measured by their performance and by results. We go over the numbers on a monthly basis. We brought new managers, we have simplified our IT infrastructure, synergized 9 systems into 1, we have enlarged our private brands from 20% to 50%, we have shorten supply time, all in all we have done the right things. The big challenge is to grow, and that’s harder.
Delta Galil’s growth over the past three years is attributed to several strategic “moves”, one of which is acquiring German underwear brand ‘Schiesser’ in 2012, when it got tangled in financial difficulties. The 87 million dollar acquisition has reinforced Delta’s entrance to the European market in general and specifically – into Germany, and has raised Delta’s sales in Europe by approx. 200 Million dollars. Schiesser is considered Delta Galil’s ‘Flagship’ acquisition.
On top of that, Delta Galil has received franchising licenses from “strong” existing brands such as Marc Opolo and Lacoste, for whom Delta Galil developed under-wear products. The US sales, who make up 55% of the company’s income, have grown in 2% this year, mostly due to the new “Avia” sports brand sales in Wallmart stores.
“After the revolution I had clients who closed down their offices in Egypt and stopped buying from there. To this day, they don’t want to buy merchandise from Egypt because they fear there may be trouble or problems. Going back there isn’t easy. The statistics of our Cairo factory are still not where we want them to be. We only produce 4%-5% of our merchandise there, but the costs and the loss of customers caused together a loss of millions, heavy losses. In 2015 this will change. The government now is a lot better, the situation has stabilized, and we’re actually about to build a new factory in Egypt.”
“We have to succeed in Egypt. There’s a good incentive there, too – no export tax to the US, which can accumulate to 30%-40% in savings. If Egypt stays stable in the next 3 years, this new factory will become the crown jewel of our company” “Lautman had tears in his eyes” At Dabah’s boardroom in the textile house is a stand on which a selection of Delta’s products are hanging, to illustrate textile innovation. When Dabah speaks of the products, suddenly the seasoned sales-person emerges from within him; “Here are seamless running-socks for Nike, we are working with them on incorporating the sock directly to the shoe. And this is shape-wear”, he points to a tight leotard, and pulls out an “older generation” garment to illustrate the difference. “This new shapewear is made of 2 types of fabric, and only applies pressure on the abdomen area, not the breasts”. He moves on to sportswear, which he hopes will lead the near future of the company, “Here is a dryfit heat vaporizing shirt, we have a full collection with this fabric, and here, this jogging tank-top is made of two different fabrics that are seamlessly attached, look how smooth the touching point is. They’re attached by melted glue, isn’t that nice?”, his face shines, and he seems to be moments away from describing the sewing machines in detail, as well.
“Right now I have no plans of retiring. I have a lot more to do, because Delta Galil is not yet one of the 10 biggest companies in the world, and that is where we want to be. We want to reach NASDAQ, and we’re not there yet. So for the next 2-3 years I’ll probably continue in my current position. I don’t know what’s next. I actually hope in the future we will find someone in the company that can take over my spot, and I can become Chairman. An exit? So far I haven’t sold anything, only bought. I’m happy with where I am now.”
“I miss Dovik (Dov Lautman). Even when I was already managing Delta, I would meet him every time I came to Israel. I always tried coming on Saturdays, because I knew during the week he has friends over but on Saturday nights he was alone. When I came, I always told him what was going on in the company, what we are doing, how are things coming along, what problems we encounter. He would always comment, offer support, he was allways very encouraging and happy. His greatest joy was when I told him I wanted to offer Noam, his son, the job as chairman, his eyes filled up with tears. That’s all he ever wanted – for Noam to be connected to the company.
“We need to learn from Dov, he was so optimistic, even through all that’s happened to him. No one would have survived like that, with the pain, the difficulty breathing – he never seemed depressed. I learnt a lot from him, mostly from his connection to the employees. That was the most important thing to him in the company. I saw how he treated employees even after he retired, always talked to them, attended weddings and funerals. Many times when I called him he was on his way to the Galilee [north of Israel] because one of the employees was getting married. And that was at a time he could barely move. It was always important to think about them.”
“He lived in Israel, he came from the industry. He cared about the machines, the factory. I care less about those. I live in America, I know the clients, the needs, to me the product is important, to take up space in the marketplace, to “win over” shelves. To me it all starts and ends with numbers. I’m a master of precision; he was more of a visionary”.