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Delta Apparel Releases Q2 Financials

Supplier firm Delta Apparel (asi/49172) announced that net sales decreased roughly .4% in its fiscal second quarter of 2016, which ended April 2. Sales were impacted to some degree by the bankruptcy of a large retail customer, according to the supplier.

Net sales were $109.2 million, compared to $109.6 million in the prior year second quarter, after adjusting for sales of $5.4 million in the since-divested The Game business and under the Kentucky Derby license that wasn’t renewed for 2016. For the first half of fiscal 2016, however, net sales were up approximately .9%, increasing to $199.3 million from $197.6 million in the same time period last year.

“The strength that Delta Apparel has shown in the first half of the fiscal year is a testament to the effectiveness of the strategic initiatives we announced 18 months ago and the ability of our team to successfully implement them,” said Robert W. Humphreys, Delta’s chairman and chief executive officer, in a statement. “While conditions in the retail apparel marketplace have shown little improvement, we have made significant progress both financially and operationally.”

The supplier also reported that it has been expanding manufacturing capacity and improving flexibility over the past two years. To further these goals, Delta plans to close its textile manufacturing operation in Maiden, NC, and transition production to its textile facility in Honduras. The move is expected to maximize production in a lower-cost facility, according to the supplier. The realignment is expected to be complete by the end of fiscal 2016, and the company expects to see cost benefits from the manufacturing changes by the first half of fiscal 2017.

“The decision to close the Maiden plant and eliminate the jobs of approximately 160 employees who have contributed significantly to our growth and success over the years was extremely difficult,” Humphreys said. “However, we believe these steps are necessary to be cost-competitive with other global competitors.”