Delta Apparel Reports FY12 Second Quarter And First Half Results
Delta Apparel, Inc. (NYSE Amex: DLA) today reported that while revenue
continued to grow in its fiscal 2012 second quarter and first half,
earnings were negatively impacted by a one-time second quarter inventory
Delta Apparel, Inc. (NYSE Amex: DLA) today reported that while revenue continued to grow in its fiscal 2012 second quarter and first half, earnings were negatively impacted by a one-time second quarter inventory markdown of $16.2 million. The inventory markdown, previously announced, was necessitated by the unprecedented record high cotton costs combined with selling price discounts in the Company’s line of basic undecorated t-shirts. As a result of the markdown, the Company’s results for the remainder of fiscal 2012 in this business should be free from the effects of these high cotton prices flowing through cost of sales. Sales for the second quarter ended December 31, 2011 totaled $105.5 million, up from the $104.7 million reported in the prior year’s second quarter. The Company had a net loss in the fiscal 2012 second quarter of $13.6 million, or $1.61 per share, compared with net income of $1.4 million, or $0.16 per diluted share, in the fiscal 2011 second quarter. The net loss was due primarily to the inventory markdown in the basics segment and lower than anticipated demand from retailers stemming from price increases on branded products necessitated by higher cotton costs. For the first six months of fiscal 2012, sales increased approximately 8% to $229.0 million versus $212.6 million for the first six months of fiscal 2011. The Company had a net loss in the fiscal 2012 six month period of $9.2 million, or $1.09 per share, stemming from the second quarter loss partially offset by the record earnings that the Company reported in its 2012 first quarter. This compares to net income of $3.1 million, or $0.35 per diluted share, in the prior year six month period. Branded Segment Review Branded segment sales for the second quarter were $47.9 million, a slight decrease from prior year sales of $48.5 million. Vintage t-shirt sales were strong during the quarter, with double-digit sales growth over the prior year period, and Art Gun more than doubled sales during the quarter. The Salt Life® brand also experienced another good quarter with continuing geographic and sales-channel expansion. While increased pricing intended to offset higher cotton costs produced a greater than expected fall-off in volume for the branded segment and slightly lower margins overall, margins did improve in the Company’s Art Gun and Junkfood businesses.