Delta Apparel, Inc. (NYSE Amex: DLA) today reported sales of $107.9 million and earnings of $0.19 per diluted share for its first quarter ended October 2, 2010. The Company’s results for the fiscal 2011 first quarter include the operations of The Cotton Exchange, which was acquired on July 12, 2010 and are included in the retail-ready segment of the Company.
First Quarter Highlights
Net sales for the three months ended October 2, 2010 were a record $107.9 million, an increase of $8.8 million, or 8.9%, from the prior year first quarter. Both of the Company’s business segments achieved sales growth compared to the prior year quarter. Gross margins improved to 24.0% compared to 23.9% in the prior year first quarter. Selling, general and administrative expenses increased to 21.2% of sales from 19.4% of sales as investments were made in the business to promote future growth for the Company. These expenses included costs associated with the acquisition of The Cotton Exchange, expenses related to the start-up of Art Gun, and new brand-marketing campaigns. Net income for the quarter ended October 2, 2010 was $1.6 million, or $0.19 per diluted share, compared to $2.6 million, or $0.30 per diluted share in the prior year first quarter.
Robert W. Humphreys, Chairman and Chief Executive Officer, commented, “The positive sales trends we saw at the start of the quarter slowed as we headed into September. We believe the concern about consumer demand for apparel products, particularly with regard to the upcoming holiday selling season, has caused retailers to take a more cautious approach to their near-term inventory commitments. This, coupled with the significant rise in cotton prices and uncertainty about its long-term impact, has added pressure to an already weak marketplace. Despite this, we were able to achieve organic sales growth of 2% in the quarter. The first quarter was marked by several strategic investments aimed at accelerating growth in some of our recently acquired businesses. While this resulted in reduced profitability, we are committed to making the necessary investments to promote our long-term growth strategies. Although the apparel marketplace remains difficult, we remain on track to reach our full year financial targets for fiscal year 2011.”