Delta Apparel reports decline in Q1 net sales

Delta Apparel has reported net sales of 93.4 million dollars for its fiscal 2015 first quarter ended December 27, 2014, versus 100 million dollars for the comparable 2014 period. Continued solid growth in Salt Life and on all of the company’s e-commerce sites was offset by lower sales in other business units. While the lower sales were mitigated somewhat by improved margins in all but one of the company’s business units and by overall lower general and administrative costs, the company experienced a net loss of 4.2 million dollars, or 0.53 dollars per diluted share, compared with a net loss for the prior year quarter of 1.6 million dollars, or 0.20 dollars per share.

Net sales for the company’s basics segment were 57.7 million dollars in the 2015 first quarter, a decrease of approximately 8 percent percent from 62.5 million dollars in the prior year period. The company has blamed decline in net sales to lower prices on reduced unit sales in the undecorated tee business, which was impacted by continued price discounting resulting from weak demand in the marketplace. Art Gun, with the successful installation of state-of-the-art digital printing equipment in the September quarter, achieved 4 percent unit growth but revenue was hindered as customers transitioned to different price-point garments.

Elaborating on the company’s performance, Robert W. Humphreys, Delta Apparel’s Chairman and Chief Executive Officer, said that this first quarter decline in net sales should not be the yardstick by which the rest of the year is measured. “We believe that most areas of our business are pointing to growth in subsequent quarters, particularly in the second half of the fiscal year. Each of our e-commerce sites reported significant growth and had their best quarter ever. While this doesn’t make up for weak sales in traditional retail outlets, it tells us unequivocally that our brands are important and sought after by consumers.”

“The recent investments in our manufacturing platform provide us with the capacity to meet current and future requirements as demand increases. As the year progresses, we should see benefits from efficiency improvements and lower input costs, with these lower costs improving our gross margins beginning in the second half of the fiscal year,” added Humphreys.

Fiscal 2015 first quarter net sales in the branded segment were 35.7 million dollars compared with 37.5 million dollars in the prior year period, a 5 percent decline. Salt Life continued its excellent performance with 15 percent growth in what is typically its weakest quarter. Salt Life currently has a substantial spring order backlog indicating stronger revenue growth rates in upcoming quarters. Soffe’s net sales in the first quarter declined 10 percent from the prior year period. The sluggish retail economy was also primarily responsible for a 5 percent decline in Junkfood sales for the quarter.