Delta Apparel is looking like the smartest guy on the block these days, reporting fourth quarter results that were significantly improved versus last year, due primarily to the October 2004 acquisition of M.J. Soffe Company. The company will start to transition management at the acquired entity this year after naming a Delta exec as president of Soffe.
M.J. Soffe delivered $32.2 million in sales in the fiscal fourth quarter ended July 3, a $7.9% increase from the divisions year-ago results as a stand-alone business. DLA said the increase came on higher branded sales in the Retail segment of the business, an increase in the Bookstore business versus the year-ago period, and Military sales that came in above plan. Delta expects Soffe to get more aggressive in the Bookstore channel due to better pricing in t-shirts.
Soffe posted $6.1 million in operating profit for the quarter, a 15% increase versus $5.3 million in the year-ago period. DLA expects to improve the profit line in 2005 as they work with Soffe to drive down costs.
Delta division sales increased 15% for the quarter to $42.3 million. Unit sales were up 11.6% to 2.5 million dozen in the period. DLA said 81% of the business is now in the catalog direct channel. Delta division operating profit was $3.9 million for the period, up 28.2% versus Q4 last year.
Total DLA sales increased 98.2% to $72.9 million from $36.8 million in Q4 last year. Gross margins improved 1030 basis points in the quarter, again due primarily to the higher gross margins associated with the Soffe branded apparel business, partially offset by lower gross margins in the basic tee shirt business. Net income jumped 232% to $5.4 million, or $1.28 per diluted share, from $1.6 million, or 39 cents per diluted share, in the year-ago period.
Full year sales were $208.1 million, a 60.7% increase, from the prior year. Soffe contributed $71.8 million in nine months of sales for the year, while Delta division sales increased 6.5% to $138.0 million versus $129.5 million last year. Inventories increased 124% at the end of the quarter versus the comparable date last year, but would have increased 14.2% without the addition of $52.0 million in Soffe inventory.
DLA has appointed Philip J. Mazzilli to the Board of Directors effective August 19, 2004. Additionally, Ken Spires has been appointed president of the M. J. Soffe Co. effective immediately. Ken is currently VP of Technical Services for Delta Apparel, Inc., the parent company of M. J. Soffe. In his new position, Ken will report to Jim Soffe, CEO of the M. J. Soffe Company.
