Delta Apparel, Inc. delivered net sales of $91.4 million for the fiscal fourth quarter ended September 30, compared to net sales of $115.5 million in the corresponding quarter last year. Salt Life Group segment net sales were $12.5 million in Q4, compared to prior-year fourth quarter net sales of $14 million. Net sales in the Delta Group segment were $78.9 million in Q4, compared to $101.5 million in the prior-year fourth quarter.
Gross margins were 11.2 percent of net sales in the fourth quarter, compared to 18.7 percent in the prior-year fourth quarter, said to be driven primarily by costs incurred to curtail production levels to better align with lighter market demand as well as elevated cotton costs. Excluding the Production Curtailment and Cotton Costs, adjusted fourth-quarter gross margins were 15.9 percent of sales. Delta Group segment gross margins for the quarter were 4.8 percent of sales, compared to 14.1 percent in the prior-year period. Excluding the Production Curtailment and Cotton Costs, Delta Group segment adjusted gross margins were 10.3 percent of sales for the period. Salt Life Group segment gross margins for the quarter were flat at 51.7 percent of sales versus 51.8 percent in the prior-year period.
SG&A decreased favorably from $19.8 million in the prior-year fourth quarter to $17.1 million in the most recent quarter, while SG&A as a percentage of sales increased over the prior-year period to 18.7 percent of sales.
Operating income declined year-over-year from $2.2 million, or 1.9 percent of sales, in fiscal Q4 last year to an operating loss of $17 million, or negative 18.6 percent of sales. Excluding the Production Curtailment & Cotton Costs, the costs associated with strategic actions, as well as a $9.2 million non-cash impairment charge on the goodwill in the company’s DTG2Go business, fourth quarter adjusted operating loss was $2.1 million, or negative 2.3 percent of sales. Delta Group segment operating income for the quarter declined from $4.8 million last year to a loss of $15.2 million in fiscal Q4 2023. Excluding the Production Curtailment & Cotton Costs, the costs associated with strategic actions and the Impairment Charge, Delta Group segment adjusted operating loss was approximately $295,000, or negative 0.4 percent of sales. The Salt Life Group segment experienced an operating loss for the quarter of approximately $400,000 compared to operating income of $1.2 million in the prior-year period.
The net loss for the period widened to a loss of $16.4 million, or a loss of $2.34 per share, from a loss of approximately $281,000, or a loss of 4 cents per share. Excluding the Production Curtailment & Cotton Costs, the costs associated with strategic actions and the Impairment Charge, the adjusted fourth-quarter net loss was $5 million, or a loss of 72 cents per share.
Net inventory at quarter-end was $212.4 million, a sequential decrease of almost $47 million, or 18 percent, from December 2022 and a year-over-year decrease from inventory of $248.5 million at September 2022. The company said the inventory decrease was a product of the team’s “excellent execution on a high-priority working capital efficiency initiative.”
Total net debt, including capital lease financing and cash on hand, was $165.3 million as of September 30, 2023, an approximate 15 percent reduction from $194.3 million at March 2023 and a year-over-year decrease from $170.6 million at September 2022. Cash on hand and availability under the company’s U.S. revolving credit facility totaled $14.2 million as of September 30, 2023, a decrease of $13.0 million from December 2022 and $20.4 million from September 2022.
Photo courtesy Salt Life
