Delta Apparel Inc. announced preliminary results for its 2020 fiscal first quarter ended December 28, 2019.
The company expects overall net sales for the first quarter of its 2020 fiscal year to be approximately $95 million compared to $101.7 million in the prior-year period. The Delta Group and Salt Life Group businesses were impacted by the shorter holiday calendar combined with an earlier shipping cut-off for in-hand holiday receipts. The Salt Life direct-to-consumer channels saw strength both online and in its branded retail stores.
Despite the decline in overall sales, the company expects to deliver strong gross margin performance as the business benefitted from improved process efficiencies while further leveraging its integrated vertical manufacturing platform. The improved gross margin performance is expected to offset the impact of the decline in sales, resulting in operating income and positive earnings per share in the fiscal 2020 first quarter.
Robert W. Humphreys, Delta Apparel, Inc.’s chairman and chief executive officer, stated, “Although the shortened holiday calendar hurt our first-quarter results, we remain confident in the underlying strength of our business model. Within our Delta Group, we saw significant growth with FunTees, as our expanded customer base and broader product capabilities drove strong results. Our expansion of manufacturing capacity is ahead of schedule to support anticipated growth in our Activewear business, including additional FunTees volume, in upcoming quarters. Within our digital print business, DTG2Go, we have also made great strides in migrating customers to use Delta catalog blanks, which further increases the efficiencies within our three Activewear-integrated facilities. We are excited about the pipeline of new accounts and additional non-holiday sales volume that we anticipate bringing on board with DTG2Go in the upcoming quarters. Within our Salt Life business, we see good momentum in the placement of Salt Life products in retail, with positive results from test doors with new national and regional retailers, and existing accounts expanding into additional product categories.”
Humphreys concluded, “Given the strength in our underlying business, we believe we are well-positioned to deliver against our goals for the full year including double-digit topline growth in our DTG2Go and Salt Life businesses and mid-single-digit growth collectively in our other business units, along with overall improving profitability.”
As previously announced, the company is scheduled to present Monday at the ICR Conference in Orlando, FL.