Delta Apparel Q1 net sales climb 19 percent despite challenging seasonal quarter

By

Arati Menon

Published
Feb 6, 2018

Delta Apparel, maker of branded and private label apparel, has posted better-than-expected revenues of 90.3 million for its fiscal year 2018 first quarter ended December 30, 2017. This marks an increase of $14.4 million, or 19 percent, from prior-year same-period sales of $75.9 million.

These figures exclude prior-year sales figures from Junkfood, the Company’s vintage-inspired clothing brand divested last March.
 
Even including the sales from Junkfood however, the company posted a $5 million or 5.9 percent net sales increase, up from earlier projections of 3-5 percent.

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It would appear that the South Carolina-based company is getting over the hit from the Junkfood sale — the quarter saw strong year-over-year sales increase across both branded and basics businesses. 
 
“With double-digit growth across the board and improved operating earnings, we are pleased with our results in what is usually our most challenging seasonal quarter,” commented Robert W. Humphreys, Delta Apparel, Inc.’s Chairman and Chief Executive Officer.
 
While net sales in the branded segment continued to post declines from to the sale of Junkfood, activewear brands like Soffe, which opened its fourth branded retail location, showed strong topline growth, driven by strength in the brand’s military distribution channel. Gross margins for the quarter improved significantly within the branded segment, expanding to 37.2 percent from 31.1 percent in the prior year period.
 
This increase was offset by a decline in the margins of the private label business from 20.6 percent in the prior year period to 18.1 percent this year. The segment’s net sales however are up 20 percent, supported by a rebound in the retail licensing channel.
 
The Company achieved a pre-tax profit of $0.4 million compared to a pre-tax loss of $0.8 million in the prior year period. 
 
“"While we expect the apparel markets to generally remain challenging, particularly for traditional retailers, we anticipate another year of growth and profitability for Delta Apparel,” said Mr Humphreys.

For the quarter, the Company reported a net loss of $9.95 million, or $1.37 per diluted share, impacted by a provisional tax expense. Earnings, adjusted for pretax expenses, came to 8 cents per share.