The stock market was underwhelmed with clothing maker Fox-Wizel's admission to a steep second-quarter 30 percent slide in profits, even though sales retreated by only 3 percent, as the company's share price fell 3.6 percent yesterday. Castro sank by a similar percentage, indicating that investors fear equally unimpressive results for the rival clothier.

Fox, which is controlled by the Fox and Wizel families, reported a net NIS 7.7 million, down 30 percent from the parallel. Sales dipped 3 percent to NIS 104.8 million.

Fox explained that the results are all a matter of timing and seasonality: Last year, Passover fell in the second quarter, while this year it was in the first.

One major upside was that the firm's cash flow from operations soared from NIS 25 million in the parallel to NIS 40 million.

Despite the revenues slide, Fox's gross margin increased to 53 percent of sales as the company continues to pursue its direct sales policy as opposed to selling via distributors. Accordingly, the firm's second-quarter gross profit rose to NIS 55.5 million. At the same time, however, Fox's marketing and sales costs steeply rose to NIS 39 million, which eroded operating profit by 25 percent to NIS 13.1 million. All told, operating costs rose from 35 percent to 40 percent of turnover.

Fox is cutting back inventory, which stood at NIS 76 million at the end of the second quarter compared to NIS 96.4 million at the end of the parallel.

Fox-Wizel also announced a NIS 10 million dividend, or NIS 1 per share. The expiry date is August 19, 2004.

Fox CEO Harel Wizel did not sound much more gleeful than investors in discussing the results. He attributed the second-quarter figures to the timing of Passover, adding that looking at the first two quarters together not only gives a far clearer picture of the company, but also indicates growth.

Haaretz: Why is the share falling?

Wizel: I don't know. Maybe because we wanted to earn NIS 10 million, and we only earned NIS 8 million and change. But let's put things in perspective: this isn't a collapse.

The market apparently doesn't like your Q2 report.

It's possible we're missing NIS 5-6 million in revenues due to Passover. But we'll wait and see what comparable companies' financials yield.

Maybe all the focus on foreign operations is leaving the home front a little neglected?

That's not true, and it is clear going abroad is good for the company. Our annual growth potential in Israel is 5 percent, so we have more or less exhausted the clothing chain here.

Are you going abroad only to get back the growth rates of old?

No. We are going there to make money.

And where do things stand there?

By the end of the year, we will have 10 branches open in Singapore and another six in Australia. The five we already have in Singapore have high revenue bases.

Eighty percent of the goods are made in China. Why does Singapore need Fox in the middle? You're not a known name there.

Why do they need Zara? They are also an unknown. Concept is the victor.

And your concept is victorious?

We have a good chance at success.

The press reported that Gmul offered to buy you out.

We said no.

A sale like that would have handed each family [Fox and Wizel] NIS 120 million on a platter.

I'm not interested. I'm interested in success.