Delta Apparel, Inc. (NYSE MKT: DLA) today reported net sales for its fiscal 2014 third quarter ended June 28, 2014, of $123.5 million and net income of $2.2 million, or $0.27 per diluted share. This compares with 2013 third quarter sales of $133.6 million and net income of $4.0 million, or $0.48 per diluted share. For the first nine months of fiscal 2014, net sales were $338.0 million compared with $360.4 million in the prior year period. The Company had a net loss for the 2014 first nine months of $195 thousand, or $0.02 per diluted share, compared with net income of $5.6 million, or $0.67 per diluted share, in the prior year period.
Responding to its financial performance and near-term view of business conditions, the Company has initiated a reorganization of its administrative structure at all levels to streamline decision-making and information flow as well as reduce duplicative and excess fixed costs. In addition, the Company is currently evaluating other initiatives focused on improving net profitability in the face of continued marketplace weakness. These other initiatives include (i) restructuring the Company’s manufacturing platform to lower product cost and strategically reduce capacity on certain product lines, and (ii) a comprehensive rationalization of all business units, product lines and sales channels.
Robert W. Humphreys, Delta Apparel, Inc.’s Chairman and Chief Executive Officer, commented that weak market conditions resulting from the continued sluggish economy are having a strong negative effect on the apparel industry in general. “Many apparel retailers and small to mid-sized brands have been affected, as weak market conditions persist across most sales channels and tiers of distribution. This pervasive weakness is an unusual condition we have not seen in recent history, and there is no certainty when there will be a reversal of these trends. As such, it is imperative that we adjust the fixed cost structure within Delta Apparel to give us the ability to operate profitably in the current retail environment. Beyond that, when conditions improve, as we expect they will, we anticipate that incremental sales growth will be reflected to a much greater degree in our bottom line,” Mr. Humphreys said.
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