Delta Apparel Registers Accelerating Sales In Fiscal Third Quarter
Delta Apparel, Inc. (PPAI 188431, S9) has announced preliminary results for the Greenville, South Carolina-headquartered supplier’s 2020 fiscal third quarter, which ended June 27. While down from the year-ago levels, the company reports sales picking up as the quarter progressed.
“The momentum we have experienced across our business segments as the third quarter progressed is encouraging and further validates Delta Apparel’s strategic advantages, including our diversification of sales channels, our broad geographic footprint, and the strong emotional connection our Salt Life and Soffe brands have with consumers,” says Robert W. Humphreys, the company’s chairman and CEO. “During the last few months we have seen orders accelerating and coming from a broader base of sales channels.”
Delta Apparel anticipates net sales for the third quarter of its 2020 fiscal year to be approximately $72 million, or 60 percent of net sales of $119.3 million in the prior year period. Its monthly sales performance accelerated throughout the third quarter, from April sales at 32 percent of year-ago levels to June sales tracking at about 90 percent of year-ago levels. The third-quarter sales performance included 32 percent sales growth in the DTG2Go digital print business, driven by the onboarding of several new customers to the DTG2Go platform as well as additional print volume from existing customers. The company plans to expand its digital print business with the opening of a new integrated digital print and distribution facility in Phoenix, Arizona, in August, combining DTG2Go’s digital print capabilities with Delta Apparel’s own supply of garments. It also plans to increase its fleet of digital printers by 10 percent.
“In our DTG2Go business, the benefits and the uniqueness of our fully integrated and diversified geographic model is building volume with existing customers, while attracting new customers to our comprehensive digital print platform,” says Humphreys. “We are thrilled to be in a position to continue to invest in this strong growth business, which is perfectly positioned to thrive in the digital economy.”
During the third quarter, direct-to-consumer sales significantly increased, including ecommerce sales that more than doubled compared to last year, led by sales growth of over 140 percent on the Salt Life ecommerce site and 80 percent on the Soffe consumer site.
“We have really enjoyed connecting directly with our loyal Salt Life and Soffe consumers through social media channels and on our ecommerce sites, as well as in our retail stores which have all now safely reopened,” says Humphreys. “It is also promising to see net sales for the Salt Life Group return to mid-single digit growth in the month of June, as our retail partners started to re-open their doors in the back half of the quarter.”
He adds, “The third quarter was unprecedented for our nation, our industry and our company. I am so very proud of our teams across all our businesses for their unwavering dedication throughout the pandemic, and of the significant progress we have collectively made to service our diverse customer base. While our non-U.S. manufacturing operations were closed for most of the quarter, we are encouraged that by the end of June we had resumed production at all of our manufacturing plants. In accordance with local regulations, we have implemented strict safety protocols and will operate at a reduced capacity in the near term for the safety of our employees and to align our production levels with anticipated future business.”
Delta Apparel expects to record approximately $24 million of non-recurring expense during its fiscal 2020 third quarter associated with impacts from the COVID-19 pandemic. These include costs related to the curtailment of its manufacturing operations and increased reserves related to the heightened risks in the market as the U.S. continues its recovery.
Humphreys says, “Our business is recovering much quicker than we originally anticipated and we believe this momentum will continue, allowing us to return to profitability in our September quarter. Each month our liquidity has continued to improve, resulting in a nearly 50-percent increase in our cash on hand and availability under our credit facility at June compared to the March levels. I remain confident Delta Apparel is in a solid financial position to emerge from this pandemic stronger, and we are ready to profitably grow our business.”