Delta Apparel, Inc. upped its sales guidance and lowered its estimate of losses for the second quarter ended Dec. 29, 2007 and affirmed its fiscal 2008 sales forecast. 

The Duluth, Ga.-based company said it currently expects second-quarter revenues to be approximately $68 million to $69 million, compared to its prior expectation of $64 to $68 million. It expects to report a loss of approximately 33 to 34 cents per diluted share versus its prior guidance of a loss of 33 to 37 cents.

Delta maintains its previously announced fiscal 2008 sales expectation of $315 million to $340 million and earnings of 62 to 76 cents per diluted share. The company remains cautious of the general economy and current state of the retail environment and said further weakening in the economy may hinder its ability to meet its current expectations.

“During the quarter we made significant progress in positioning our business for growth and profitability in the future,” said Robert W. Humphreys, Delta's president and chief executive officer. “The start-up of our new, state-of-the-art textile facility in Honduras was on pace with expectations, producing first-quality dyed fabric during the quarter. This facility should be providing our activewear business with lower cost production to drive enhanced profitability in the fourth quarter of the fiscal year. Despite the slowing retail environment, we achieved sales growth in our retail-ready business and penetrated new markets and new doors for our products. While we are cautious about the retail conditions in the marketplace, we believe we are positioned to achieve our sales and earnings goals in the second half of our fiscal year.”

Textile Restructuring

Delta said it made significant progress on its textile initiatives during its second fiscal quarter. The Maiden, N.C. textile facility reached efficient production levels in the quarter and continued to improve its quality levels. Production at the company’s new Honduran textile facility commenced with bleached products in November 2007 and the production of dyed products in December 2007. This facility is on pace to reach its first target of 500,000 pounds of weekly production in the  fiscal 2008 fourth quarter.

Soffe Military Uniform

Delta previously announced that the Soffe business had developed and was bidding on a new military training uniform, including a specially designed shirt and shorts. During the second fiscal quarter, Soffe was awarded a significant part of the program, representing additional business in the military distribution channel. The company is currently working to build production and complete required certifications for the fabric and production methods. Soffe expects this program could represent an additional $2 million to $3 million in sales in the second half of the year.

“Despite the near-term challenges with consumer demand for apparel, we remain confident that we are building a strong platform for growth in each of our business segments and believe the competitive position and operational capabilities of our business remain very healthy,” said Humphreys. “We look forward to completing our textile restructuring initiatives in the second half of the fiscal year and pursuing our opportunities for enhanced profitability and sales growth.”

Delta plans to report fiscal 2008 second quarter results on Friday, Jan. 25, 2008.