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Misgav, Israel, May 31, 2009 - Tefron Ltd. (OTC:TFRFF; TASE:TFRN), a leading producer of seamless intimate apparel and engineered-for-performance (EFP^TM) active wear, today announced financial results for the first quarter of 2009.

First Quarter 2009 Results

First quarter revenues were $47.0 million, representing a 7.8% decrease from the first quarter of 2008 revenues of $50.9 million. The decrease in revenues in the quarter was due to a decline in sales of active-wear and intimate apparel products. This decrease was primarily due to the worldwide economic slowdown.  This decrease was partly offset by an increase in sales of swimwear.

First quarter gross margin was 13.0% compared with a gross margin of 12.8% in the first quarter of 2008. Operating income for the quarter was $0.3 million (0.7% of revenues), as compared with an identical operating income of $0.3 million (0.6% of revenues) in the first quarter of 2008.  Net income for the quarter was $0.6 million, or $0.3 per diluted share, as compared with net loss of $0.6 million, or $0.3 per diluted share, in the first quarter of 2008.

The improvement in profitability was primarily due to the implementation of part of the company’s 2009 efficiency plan, which included among others reduction manufacturing costs through consolidation of the Tefron’s production sites, as well as an across-the-board headcount reduction of approximately 15%. We expect to implement the remaining part of the efficiency plan  in the second quarter of 2009. In addition, the appreciation of the US Dollar versus the New Israeli Shekel contributed to the improvement.

Management comments

Mr. Adi Livneh, Chief Executive Officer of Tefron, commented, “In this quarter Tefron recognized an operating profit, after three quarters of operating losses. While we are pleased with our increase in profitability, we are still facing the effect of the global crisis and expecting to show an operating loss for the second quarter of 2009."