Delta Apparel Q3 net sales up 1.7 percent
By Prachi Singh
Aug 4, 2015
Delta Apparel reported net sales growth of 1.7 percent after adjustment to exclude the recently sold The Game branded business in its fiscal 2015 third quarter ended June 27, 2015. Without such adjustment, net sales for the fiscal 2015 third quarter were 120.5 million dollars versus 123.5 million dollars for the comparable 2014 period.
Net income for the quarter doubled to 4.4 million dollars, or 0.55 dollars per diluted share, compared to net income of 2.2 million dollars, or 0.27 dollar per diluted share, same quarter, last year. Gross margins continued to strengthen both on a sequential basis from the 2015 second quarter and year-over-year. Operating profit was 5.7 percent of sales, a 5.3 million dollars improvement over the comparable 2014 period.
Commenting on the company's third quarter results, Robert W. Humphreys, Delta Apparel's Chairman and Chief Executive Officer, said, “We are pleased that Delta Apparel not only turned the corner in terms of sales and net income growth, but showed vast improvement in other areas such as gross margin development, general and administrative cost reductions, and operating margin expansion.”
For the first nine months of fiscal 2015, net sales were 328.9 million dollars compared with 338 million dollars in the prior year period. The sale of The Game collegiate business in March contributed 6.4 million dollars to the decline. Net income was 3.9 million dollars, or 0.48 dollars per diluted share, compared with a net loss of 195 thousand dollars, or 0.02 dollars per diluted share, in the comparable 2014 period.
Net sales for the company's basics segment were 79 million dollars in the third quarter, a 4.2 percent increase over the prior year's third quarter net sales of 75.8 million dollars. Solid performances in both activewear and Art Gun were the drivers of this improvement. Activewear sales increased 3.6 percent year-over-year, driven by 12.7 percent growth in the private label business. Art Gun, the company's ecommerce business specialising in customized apparel offerings through its proprietary software and state-of-the-art digital printing platform, increased sales 26.2 percent to 2.9 million dollars.
The company's branded segment had net sales of 41.5 million dollars compared with 47.7 million dollars for the 2014 third quarter. The removal of approximately 5 million dollars in revenue due to the sale of The Game branded business in March was the primary reason for the decline. Junkfood sales were up slightly compared with the prior year quarter, with strong margin improvement both sequentially and over the 2014 third quarter. Continued double-digit sales growth at specialty retailers offset some weakness in other sales channels. The Junkfood website sales increased 22 percent in the June quarter over the prior year, bringing year-to-date sales growth to 61 percent.
Soffe sales were generally flat with the prior year, with fewer closeout sales compared to the prior year driving the 0.6 million dollars decline in revenue. Sales of Salt Life products were lower than expected, with sales growth of 4.1 percent compared to the prior June quarter.