Delta Apparel Reports Third Quarter, Nine-Month Financial Results

Delta Apparel, Inc. has released its third quarter 2017 and nine-months fiscal results, reporting an increase in sales of $4 million for the quarter and net income for the nine-month period of $8.4 million, compared to $6.7 million during the same period in 2016.

The Greenville, South Carolina, supplier’s third-quarter sales increase of approximately four percent excludes sales of its Junkfood Clothing Company, which it sold in March 2017. The first nine months of fiscal 2017 included two quarters of sales in the since-divested Junkfood business and net sales were $293.8 million compared with $310.9 million in the prior year period. Excluding Junkfood sales, net sales for the first nine months would have shown a slight increase over the same period in 2016.

“The Company overall had a solid third quarter,” says Robert W. Humphreys, Delta Apparel, Inc. chairman and CEO. “Adjusting sales for the divestiture of Junkfood, our consolidated net sales increased four percent in the third quarter, with earnings per diluted share up approximately 14 percent over the prior year quarter.  We continue to be pleased with our ecommerce business, which achieved year-over-year sales growth of 41 percent on our consumer sites during the quarter after excluding prior year Junkfood ecommerce sales, and 15 percent on our business-to-business sites during the quarter.

Delta Apparel’s Basics segment reported net sales in the 2017 third quarter of $79 million, a 9.6-percent increase over third quarter 2016. Operating profits in the segment increased to $7.5 million, or 9.5 percent of sales. The company’s Activewear business also grew net sales, up 11 percent from the same period last year. It attributes Activewear’s growth to single-digit sales growth in the Delta Catalog business and a 25-percent increase in the FunTees private label business. Delta Catalog sales benefited from improving conditions in the retail licensing channel coupled with continued growth in the promotional products and regional screenprint markets. Sales were up 60 percent in Delta Catalog’s fashion basics. Art Gun’s net sales in the quarter slipped $0.7 million due to the loss of a customer and delayed new partner launches, although with several new customers being on-boarded and geographic expansion, Delta Apparel expects the brand’s sales to return to double-digit growth in 2018.

“Activewear performed well, with strong organic growth,” says Humphreys. “We are realizing the incremental benefits of our manufacturing realignment and the manufacturing efficiencies have exceeded our expectations. We just launched a newly redesigned business-to-business website that we believe will greatly enhance the on-line experience for Activewear customers. The private label offerings in our FunTees business continue to garner customer interest and we are expecting record revenue in our FunTees business for the year.

“While we are disappointed that some of Art Gun’s new customer launches were delayed during the quarter, they remain in the pipeline and should be completed during the next two quarters. To capitalize on that growth and better serve our customers, we have ordered additional equipment that will increase Art Gun’s manufacturing capacity by more than 50 percent. Art Gun’s virtual inventory and fulfillment model continues to be an innovation focus for forward-looking businesses and creates exciting cross-selling opportunities across the Delta Apparel platform.”

While the Branded segment’s net sales for the quarter of $25.3 million are down from the $39.5 million of third quarter 2016, 2016’s figure includes $11.3 million of sales in the Junkfood business. The segment has also been affected by retailer bankruptcies, although this has been partially offset by sales growth at Salt Life.  Operating profit for the branded segment was $2.1 million compared to $2.7 million in the prior year third quarter. The Soffe brand performs well with e-retailers, and sales on its consumer ecommerce site increased 15 percent during the third quarter and are up 24% year-to-date. Salt Life achieved 48 percent year-over-year sales growth in its ecommerce business during the quarter, but saw softness in the “big-box” retail sporting goods channel, tempering its overall growth and producing an aggregate sales increase of two percent.

"Although many retail channels remain challenging, Delta Apparel continues to improve its market position,” says Humphreys. “Our omni-channel marketing strategy combined with our strong manufacturing base is driving growth in our basics and branded segments.  We believe Delta Apparel is pointed toward a good fourth quarter and will continue to position itself for future success.”

filed under Delta Apaprel | August 2017
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