Delta Apparel, Inc. (NYSE Amex: DLA) announced today that, due to record high cotton prices combined with selling price discounts, the Company will take a one-time markdown of inventory of approximately $16 million in its fiscal 2012 second quarter, which will be reported on January 26, 2012. The action affects only the Company’s inventory of basic undecorated t-shirts and will negatively impact second quarter earnings by approximately $1.20 per share.
Second quarter 2012 results also have been negatively affected by lower sales volume in branded products due to price increases to retailers that resulted in somewhat reduced demand. Revenue for the second quarter is expected to be approximately $105 million versus $104.6 million for the prior year’s second quarter. Due to the above mentioned factors, the Company anticipates a loss in the 2012 second quarter in the range of $1.58 to $1.62 per share versus earnings in the comparable prior year quarter of $0.16 per share.
Robert W. Humphreys, Delta Apparel’s Chairman and Chief Executive Officer, said “The Company is taking the entire amount of the markdown in the second quarter to put it cleanly behind us, giving us the rest of the year to focus on our goals for 2012 and 2013. This action, along with the effect of lower selling prices in the second quarter, will reduce our guidance for our full 2012 fiscal year. We now anticipate that 2012 revenue will be in the $480 million to $500 million range and that earnings will be in the range of $0.50 to $0.60 per diluted share for the year.”
“While we continue to view the volatile cotton market as a risk, we believe we have taken the appropriate action for the immediate term. We will continue to work on ways to leverage our costs and adjust our price structure to best benefit the Company in the long term,” Mr. Humphreys said.