Delta Apparel has swung to a loss in the third quarter as its sales fell 16.2 percent.
The US lifestyle and activewear company made a net loss of 6.3 million dollars in the three months ended July 1 compared to a profit of 6.2 million dollars in the prior year period.
That came as net sales fell to 106.3 million dollars from 126.9 million dollars a year earlier, with Salt Life Group sales down 17.7 percent to 17.2 million dollars, and Delta Group segment sales down 15.9 percent to 89.1 million dollars.
The company noted that its Q3 Salt Life Group sales were skewed by “significant” sales occurring in the prior year third quarter due to transportation delays.
Commenting on the results, chair and CEO Robert W. Humphreys said: “We saw encouraging indications throughout the quarter that the two major trends impacting both our business and the entire industry this year - elevated cotton pricing and demand destruction from high inventory levels in the retail supply chain - are receding and we are moving into a more normalized operating environment.”
He said the company’s decision last year to reduce production levels and purchase less price-inflated cotton “proved to be strategically sound, but the significant one-time cost impacts of that decision greatly impacted our operating results this quarter and year-to-date”.
Looking ahead, Humphreys said the company expects “steady improvement in our operating results as we close out our fourth quarter and move into our next fiscal year”.
For fiscal year 2024, the company expects net sales of between 410 million dollars and 425 million dollars, and operating profit margins of between 3.25 percent and 4.25 percent.
It expects “sequentially improving gross margins and operating profit as well as topline growth in the back half of the year”.