News November 18, 2022
Delta Apparel: Sales Up, Earnings Decline, Production Scale-Back Planned
One positive note for the Top 40 supplier was that “solid growth” in sales to screen printers and distributors helped drive the topline revenue rise.
Business with screen printers and promotional products distributors helped Top 40 supplier Delta Apparel (asi/49172) increase full fiscal-year 2022 sales 9.8% in its Delta Group business channel – a rise that helped fuel an overall 11% year-over-year jump in total company revenue to $484.9 million.
Still, the Duluth, GA-headquartered company’s annual and fourth-quarter net earnings declined as heightened expenses weighed. And the firm is, at least temporarily, scaling back production given heavy inventory levels and other factors.
Delta Apparel’s Delta Group business channel includes, but isn’t limited to, sales to the promo/decorated apparel industry.
“Within our Delta Group segment, we continued to see solid growth in our regional screen print and ad specialty businesses,” said CEO Robert W. Humphreys.
Still, there were headwinds.
In Delta Apparel’s fourth quarter that concluded Oct. 1 along with the ending of the fiscal year, sales in the Delta Group declined 1.1%. Total company topline sales experienced a tepid rise of less than 1% compared to the prior year’s fourth quarter, tallying $115.5 million.
For the full fiscal year, Delta Apparel’s net income was $19.7 million, or $2.80 per diluted share, compared to net income of $20.3 million, or $2.86 per diluted share, in the prior year.
In Q4, Delta Apparel sustained a loss of $281,000, or -$0.04 per share. Higher input costs, unabsorbed manufacturing expenses, and increased selling, general and administrative expenses eroded earnings.
Total net inventory at year end was $248.5 million, compared to $161.7 million a year ago. The year-over-year inventory expansion reflected higher input costs impacting materials, transportation and labor, as well as an increase in units on hand.
“We currently plan to operate some of our facilities at less than full capacity in the first half of fiscal 2023 until inventories better align with overall demand,” Humphreys said.
Based on estimated 2021 North American promo product revenue of $46.7 million, Delta Apparel ranked 34th on Counselor’s most recent list of the largest suppliers in the industry.