Delta Apparel, Inc. saw net sales increase 3.5% to $62.7 million in its fiscal first quarter ended September 30 from $60.6 million last year. The Retail-ready segment, which includes the Soffe and Junkfood businesses, reported a sales increase of 4.4% to $32.4 million for the first quarter compared to $31.0 million last year. The sales increase was driven by record sales in the Soffe business, which was up “over 46%,” but was offset by weakness at Junkfood according to management. Operating income in the first fiscal quarter decreased $1.2 million, or 30.8% to $2.7 million from the $3.9 million reported last year.
The Activewear segment, which includes the Delta Apparel business, reported sales of $30.3 million for the quarter, a 2.6% increase from the prior years quarter. Higher raw material prices and higher transportation costs, however, drove a decrease in operating income to $0.2 million compared to $2.1 million in the prior year quarter.
Gross margins declined 320 basis points to 27.7% compared to 30.9% in the prior years first quarter, primarily as a result of lower sales in the Junkfood business and higher raw material prices.
Net income for the first quarter was $2.2 million, or 26 cents per diluted share, down 35.3% from $3.4 million, or 39 cents per diluted share, last year. Net income for Q107 would have been less were it not for a $700,000, or 8 cents per diluted share, gain resulting from the final earn-out payment made to former M. J. Soffe shareholders.
For Q2, the company expects sales of $74 million to $78 million and diluted earnings of 14 cents to 18 cents per share. For the full fiscal year, net sales are projected to be in the range of $325 million to $340 million with diluted earnings per share of $1.81 to $2.00.
