Delta Apparel said it expects to see a 6 percent decline in sales in its fiscal second quarter ended March 28.

Robert W. Humphreys, the company’s chairman and chief executive officer, commented, “All businesses are currently operating in an unprecedented and difficult environment. It is during times like now that we are especially proud of the strategic advantages within Delta Apparel, including our diversification of sales channels and our broad geographic footprint. Through the disruptions that have taken place worldwide, we have been able to stay open and operate our business with current inventory levels sufficient to service customers in the near-term. Although sales in many of our distribution channels, including traditional retailers and our own branded stores, are considerably lower or even curtailed, we are seeing positive results in other areas of our business. About 25 percent of our business is generated through sales channels that have not been significantly impacted by COVID-19, including our e-Commerce sites, DTG2Go, and our military businesses. In fact, in April we are actually seeing a meaningful acceleration in our branded direct-to-consumer e-commerce sites and in our DTG2Go on-demand business. Customers are clearly seeing the benefits and the uniqueness of our fully-integrated and diversified geographic digital printing model, and we are gaining share in this market.”

The company anticipates net sales for the second quarter of its 2020 fiscal year to be $96.7 million, which represents a 6.0 percent decrease compared to $102.8 million in the prior-year period. Prior to the March impact of COVID-19, the company was on pace to achieve sales growth of approximately 9 percent for the quarter. The company anticipates second-quarter earnings per diluted share to be within a range of $0.16 to $0.18 compared to $0.13 in the prior-year period.

Humphreys continued, “Following the trend of our first fiscal quarter, our gross margins meaningfully expanded during our second fiscal quarter, despite some discrete costs that we took in March related to the temporary closure of certain manufacturing operations in countries where the government-mandated country-wide shutdowns. During the March quarter, we expensed approximately $2 million in costs associated with these plant curtailments, reducing our earnings by approximately $0.20 per diluted share. Adjusting for these discrete expenses, our earnings would have been in the range of $0.36 to $0.38 per diluted share.”

The company announced that it has taken aggressive actions to strengthen its financial position, preserve cash, and improve liquidity beyond its current levels. At the end of March, Delta Apparel had approximately $30 million of availability under its U.S. revolving credit facility and has reached an agreement in principal with these lenders to secure additional flexibility under the credit facility that should support the business over the next six months.

Delta Apparel, Inc., along with its operating subsidiaries, DTG2Go, LLC, Salt Life, LLC, and M.J. Soffe, LLC, is a vertically-integrated, international apparel company that designs, manufactures, sources, and markets a diverse portfolio of core activewear and lifestyle apparel products under the primary brands of Salt Life, COAST, Soffe, and Delta.

Photo courtesy Delta Apparel