Supplier firm Delta Apparel (asi/49172) reported that net sales decreased approximately 4.6% in its fiscal second quarter of 2017, which ended April 1. Sales were impacted primarily due to lower sales at Junkfood and the lingering impact of the bankruptcy of a large retail customer, according to the supplier. Net sales were $104.1 million, compared to $109.2 million in the prior year second quarter. For the first half of fiscal 2017, net sales were down approximately 5.1%, decreasing to $189.5 million from $199.3 million in the same time period last year.
“Our fiscal 2017 second quarter was productive and we completed a number of key initiatives to further improve our business results,” said Robert W. Humphreys, Delta’s chairman and CEO, in a statement. “Earnings were up nearly 10% even after adjusting for the $0.11 per share gain from the sale of Junkfood. As we indicated last quarter, we remain focused on strategies that will drive revenue growth and improved operating margins throughout our company.”
Basics segment revenue in the second quarter grew to $70.8 million from $69.8 million in the prior year quarter. Art Gun achieved record revenue for the quarter, an 11% increase over the comparable 2016 quarter. Delta Activewear sales grew 1% due to strong sales growth with private label programs. Fashion basics also contributed to the Activewear growth with a 40% sales increase and significantly higher margins than basic tees. The new fashion basics products continue to be well-received, the company said, particularly the new Delta Platinum line and its elevated fabrications in fashion silhouettes for both men and women.
However, branded segment revenue in the second quarter decreased to $33.3 million from $39.3 million in the prior year quarter. The decrease stemmed from a 40% decline in Junkfood sales and The Sports Authority’s bankruptcy negatively impacting Soffe’s sales during the quarter, Delta said.
For the rest of 2017, Humphreys expects record revenue from Salt Life and Art Gun, and continued improvement in Activewear. Additionally, the company anticipates a return to growth and improved profitability at Soffe, driven by consumer demand for branded products and strengths with their Made in America programs.
“We had a good quarter in a challenging retail environment, and we believe those results are a preview of our anticipated second-half performance,” Humphreys said. “Our direct-to-consumer business should continue to improve profitability and expand its outreach. In addition, our cost structure should continue to improve as we realize the full benefit of our manufacturing realignment over the next several quarters. We believe that the combination of all of these elements will result in a future of sales and earnings growth for Delta Apparel.”
While Delta Apparel did not break out promotional product sales in its quarterly statement, the firm recently reported to Counselor that its 2016 North American promotional product sales were $45 million.