Delta Apparel net sales rise 2.5 percent in FY15

For the full 2015 fiscal year, Delta Apparel reported net sales growth of 2.5 percent after adjustment for The Game sales. On an unadjusted basis, net sales were 449.1 million dollars compared with 452.9 million dollars in the prior year. Operating profit for the year was 16.1 million dollars compared to an operating loss of 1.7 million dollars in the prior year. Net income was 8.1 million dollars, or 1 dollar per diluted share, compared with a net loss of 960 thousand dollars, or 0.12 dollar per diluted share, in the prior year.

Net sales growth for its fourth quarter ended October 3, 2015 was 12.7 percent over the prior year period, after adjusting for prior year period sales in its recently divested The Game business. The Game business was sold in the fiscal year 2015 second quarter. Before the adjustment, net sales for the quarter increased to 120.2 million dollars from 114.9 million dollars in the prior year period. Fourth quarter operating profit grew to 5.1 million dollars, or 4.3 percent of sales, driving net income to 4.2 million dollars, or 0.53 dollar per diluted share, compared to a net loss of 765 thousand dollars, or 0.10 dollar per diluted share, in the 2014 fourth quarter.

Regarding the great progress made by the company during the year, Robert W. Humphreys, Delta Apparel’s Chairman and Chief Executive Officer, said, “We saw net sales growth in the third and fourth quarters and gross margins expanded sequentially through the year and year-over-year. Operating income was up substantially and we achieved net earnings totaling 1.08 dollar per share for the final two quarters of our fiscal year.”

Basics and brand segments review

Net sales in the company’s basics segment grew 21.1 percent in the fourth quarter, to 74.4 million dollars, compared with 61.4 million dollars in the prior year period. Activewear sales increased 19.6 percent, driven by a 9 percent increase in the catalog business and a 46 percent increase in private label sales. New products such as fleece, Delta-Dri and snow heathers as well as increases in “full package” programs drove catalog growth during the quarter.

Art Gun continued to grow with a 60 percent increase in net sales driven by new customer launches and expanded product lines with existing customers.

After adjustment for the sale of The Game, net sales for the branded segment grew 1.4 percent during the fourth quarter compared to the prior year period. On an unadjusted basis, fourth quarter net sales were 45.8 million dollars compared with 53.5 million dollars in the prior year period, with all business units experiencing gross margin expansion. Salt Life increased net sales by 10 percent during the fourth quarter versus the prior year period.

Junk Food sales grew 7 percent, primarily driven by growth in large retail group sales and boutiques. The company anticipates that much of Junk Food’s growth in the next few quarters will be driven by boutiques and specialty stores. While Soffe achieved solid growth in the independent sporting goods channel, it was not enough to offset a decline with big-box sporting goods retailers, resulting in an 11 percent decrease in net sales for the quarter. Soffe expects to launch a new B2B website in early calendar year 2016 to enhance growth opportunities in the independent sporting goods channel.

“Looking ahead, we believe there will be a continuation of the soft retail environment but, regardless, we believe we are positioned to further improve our operating results in 2016. Our fixed cost structure is now lower and we will have a full fiscal year to reap the anticipated benefits of the actions we took in the past year. We are excited about introducing new performance and lifestyle products across our business units for spring that we believe will enhance our current offerings to consumers. These steps give us encouragement that we should see another year of sales growth and profit improvement for Delta Apparel in fiscal year 2016,” said Humphreys.