Basics Segment Review
The basics segment's net sales in the fiscal 2012 third quarter were $67.0 million, down approximately 5% from last year’s third quarter. The decline came from the Delta Catalog business, which continues to suffer from excess inventories in the marketplace. The FunTees business continued to grow in the 2012 third quarter with a 13% increase in net sales. The increased revenue, coupled with lower costs, improved profits in the Company's private label business.
Robert W. Humphreys, Delta Apparel’s Chairman and Chief Executive Officer, said that while he is disappointed in the results for the quarter, economic and apparel marketplace improvements that are just beginning to happen warrant cautious optimism. He further stated, “The inordinate cotton price increases of 2011 that created so much turmoil in the marketplace are now moderating. As the higher inventories in the marketplace are worked through, sales volumes should return to a more normal growth pattern, pricing should stabilize, and we would envision a better business environment going forward."
“In the meantime, we have taken several steps to reduce costs and better position Delta Apparel, Inc. for next year. We have completed our investment to bring all of our branded businesses under one enterprise system, providing service efficiencies and cost savings. We are adjusting our manufacturing output to manage inventory levels to market conditions. In addition, we are moving several functions in our private label business offshore to streamline operations which should enhance service levels to our customers and reduce costs. While some of these initiatives have short-term costs which will be incurred in fiscal 2012, they should provide long-term benefits that we will begin to recognize in fiscal 2013. We believe that these and other steps we have taken to strengthen our business will become apparent as the economic environment improves.”