Sales, Net Income Down for Delta Apparel in Q2

Top 40 supplier Delta Apparel (asi/49172) on Monday reported declines in net sales, gross profit and net income for the company’s fiscal second quarter, which ended March 31. While combined revenue for the company’s first two fiscal quarters of 2018 ticked up about a half-percent to $190.3 million, diluted earnings per share for the sixth month period came in at a loss of $0.87 on the back of a net income loss of $6.3 million, financial data showed.

For the second quarter, net sales topped out at about $100 million, down from $104.1 million during the same quarter the prior year. Quarterly gross profit was $22.2 million, a drop of about $2 million from 2017’s second quarter. Meanwhile, 2018 Q2 net income registered $3.6 million – off nearly $1 million year-over-year. Gross margins ended at 22.2%, compared to 23.3% in the prior year period.

Nonetheless, Delta Apparel executives stressed that the base-line declines were tied, in part, to the company having divested its Junkfood Clothing brand. Excluding Junkfood Clothing sales and revenue gained from the sale of the brand during the prior year period, Delta Apparel’s total second quarter sales rose 2%, while quarterly earnings per diluted share tallied $0.48, up a cent from 2017, according to Delta Apparel.

In the company’s “Basics Segment,” year-over-year second quarter sales increased 4% to $73.7 million, data showed. The basics segment includes sales to the promotional products industry/regional screen print channels.

Notably in Basics, Delta Apparel acquired DTG2Go, a digital print business, during the second quarter. Delta melded that operation with its previous holding, Art Gun, under the DTG2Go brand. Combined, the business channel reportedly tallied 20% organic sales growth from the prior year during the second quarter. “The combined business…gives us the most comprehensive on-demand solution in the high-growth digital print space,” said Delta Apparel CEO/Chairman Robert W. Humphreys.

Meanwhile, sales in Delta Apparel’s “Branded Segment,” which formerly included Junkfood Clothing, dropped 21% – from $33.3 million in Q2 2017 to $26.3 million in the current fiscal year’s second quarter. Even so, revenue for Delta Apparel’s flagship retail brand, Salt Life, rose almost 7% for the quarter.

Looking forward, Humphreys said he is optimistic. “Despite an uneven retail environment and cost pressures in a number of areas, our overall first-half performance was solid and our team is focused on strategies that should meaningfully impact both the top and bottom lines,” he said. “We expect to see incremental benefits from our new products and category extensions, broadening customer base, and investments in the digital print and fulfillment model.”

With reported 2016 North American promotional product revenue of $45 million, Delta Apparel ranked 38th on Counselor’s most recent list of the largest suppliers in the industry. A new list is due out in July.