Despite gains in promo products revenue, Top 40 supplier Delta Apparel (asi/49172) reported its total annual net sales declined 9.4% for the company’s fiscal year 2017, which ended September 30. The precipitous decline from $425.2 million in annual sales in fiscal 2016 to $385.1 million in 2017 was largely a consequence of Delta Apparel selling its Junkfood Clothing brand in March, the company said.
Nonetheless, even when adjusting for the Junkfood divesture, Delta’s net sales dropped 1.4% year-over-year. Continued retail weakness, customer bankruptcies and severe weather-related market disruptions drove the decline, Delta reported.
“The year began with Hurricane Matthew and ended with hurricanes Harvey and Irma, all three of which disrupted some of our key markets,” said Robert W. Humphreys, Delta Apparel’s chairman and CEO. “In the months between, the retail sector and consumer demand remained weak, resulting in less apparel retail doors in the market.”
Still, there were bright spots. Delta’s net income increased to $10.5 million, or $1.33 per diluted share, compared with $9 million, or $1.12 per diluted share, in fiscal year 2016. The per-diluted-share tally represented a rise of 19%. Further, net sales in Delta Apparel’s basics segment increased 1.1% year-over-year to $280.3 million due to “strong growth in private label sales and solid gains in the ad-specialty and regional screen print channels,” though such gains were partially offset by softness in the retail licensing channel, the company said in an earnings release.
For the full year, revenue growth and higher gross margins led to operating income in the basics segment of $24.2 million, an 8.4% improvement from the prior year.
Looking ahead, Delta Apparel is confident that the strong performance of its Salt Life brand, manufacturing realignment, “diverse” distribution channels and proactive measures to reduce fixed costs and focus on segments with higher growth potential will lead to a brighter future. “All in all, it was a good year for Delta Apparel, and we expect the major initiatives we completed to benefit us in fiscal year 2018 and beyond,” Humphreys said. “Although the retail environment is likely to remain challenging, we believe we are off to a good start as we move into our new fiscal year.”
With reported 2016 North American promotional product sales of $45 million, Delta Apparel ranked 38th on Counselor’s 2017 list of the largest suppliers in the industry by revenue. The 2016 performance in promo products sales represented a rise of 7.1% over 2015.