Delta Apparel Q3 Sales Up 16%

Delta Apparel, Inc. reported net sales for the three months ended April 2, 2011 were a record $125.0 million, an increase of $17.0 million, or 15.8%, as both of the companys business segments achieved double-digit sales growth compared to the prior year third quarter.

Among other results:

Robert W. Humphreys, Chairman and Chief Executive Officer, commented, Delta Apparel, Inc.s marketing and merchandising initiatives in both business segments, coupled with favorable manufacturing performance and our continued ability to leverage our fixed costs, were the key components in delivering this significant earnings expansion on double-digit revenue growth. We feel having a vertically integrated manufacturing platform in the western hemisphere is a strategic advantage, allowing us to meet the needs of retailers on price, quality and speed of delivery.

Fiscal Year 2011 Outlook

Based on Delta Apparel, Inc.s third quarter results and outlook for the fourth quarter, the company has raised its full year sales and earnings guidance for fiscal year 2011. The company now expects earnings to be in the range of $1.85 to $1.95 per diluted share from its previous guidance of $1.55 to $1.70 per diluted share. This would be an increase of between 32% and 39% over earnings of $1.40 per diluted share in fiscal 2010. Full year 2011 sales are now expected to be $465 to $475 million, up $10 million from its previous guidance range and sales growth of 10% to 12% from fiscal year 2010 sales of $424.4 million. The 2010 fiscal year was a 53-week year while fiscal year 2011 is a 52-week year. The Company further developed its tax planning during the quarter and now expects its effective tax rate to be 26% for fiscal year 2011 compared to its previous expectation of 30%.

Branded Segment Review

Branded segment sales were $54.3 million, a 17.5% increase from the prior year third quarter sales of $46.2 million. The sales increase is comprised of organic growth of 9.3% and the additional revenue from The Cotton Exchange, the college bookstore division of Soffe. Higher sales of Soffe® apparel and The Game® headwear, coupled with the new Salt Life® collection, drove the organic sales growth during the quarter. After achieving 70% sales growth in the prior year third quarter, revenue declined in the Junkfood business during the current year third quarter; sales did, however, remain above levels in the third quarter of fiscal 2009. This decline, coupled with additional marketing and operational expenses associated with Salt Life® and the digital printing business, drove a decrease in operating income to $1.5 million in the third quarter of fiscal year 2011 compared to $3.3 million for the same period last year.

Basics Segment Review

The basics segment had sales of $70.6 million for the quarter ended April 2, 2011, an increase of 14.5% compared to the prior year third quarter, driven by sales growth in both catalog and private label products. The revenue growth resulted from a 19.6% increase in average selling prices partially offset by slight decline in units sold. The higher selling prices, coupled with strong manufacturing results and lower selling, general and administrative expenses, resulted in operating income of $6.6 million for the quarter ended April 2, 2011, a $5.0 million improvement from the prior year third quarter.

Fiscal Year to Date Highlights

Net sales for the nine months ended April 2, 2011 were $337.6 million, an increase of $39.4 million, or 13.2%, compared to the same period for the prior fiscal year. The sales growth included revenue from the acquisition of The Cotton Exchange, along with an organic sales increase of 7.6%. Net income for the nine months ended April 2, 2011 was $8.8 million, or $1.00 per diluted share, compared to $6.5 million, or 76 cents per diluted share in the prior year period.

Humphreys concluded, While the marketplace is facing challenges ahead, we think Delta Apparel, Inc. is positioned for continued sales growth and earnings expansion. Having a strong portfolio of established brands that appeal to a large and growing consumer base, as well as fresh brands should enhance future growth through further diversification of products and distribution channels. Our manufacturing platform supports these programs by providing low-cost, quality products with short lead-times. Our commitment to continuous process improvement initiatives, along with expansion of our facilities, should allow us to further leverage fixed costs and expand profitability. In addition, the strength of our balance sheet gives us the flexibility to continue to make prudent strategic investments towards our growth in the future. We believe that Delta Apparel, Inc. is well positioned to create significant and sustained value for our shareholders.”

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