Soffe Carries Delta Apparel in Second Quarter…

Delta Apparel, Inc. saw its FunTees acquisition mask weakness in its core Delta apparel business, while Soffe continued to be a bright spot in the second quarter. Junkfood, on the other hand, was unable to keep pace with a strong year-ago quarter, which combined with the softness in Delta, would have caused a negative sales result were it not for the addition of FunTees.

The sales decline in the company’s Retail-Ready division was attributed to lower sales in the licensed t-shirt business, offset slightly by increased sales in the Soffe business. Management noted that though Junkfood sales were down from the year-ago level when sales were “at almost twice its historical levels,” they did improve over the first quarter. The Soffe business continued to grow its sales, achieving a 22.3% increase in sales from its prior year second quarter with improvements in each of its distribution channels.

In the activewear segment, the large sales increase over the year-ago quarter is wholly a result of the inclusion of results from the acquired FunTees business as the core Delta business posted a 9.3% sales decline. In the Delta business, average selling prices increased approximately 4% from the prior year second quarter and increased approximately 2% from the 2007 first fiscal quarter. The increased selling prices were offset by a decline in unit volume, “primarily in the core basic t-shirt products.” Gross margins in the segment were also said to be down, which in turn led to the decrease in operating income.

For the third fiscal quarter, the company expects sales in the range of $84 million to $88 million and DEPS of 31 cents to 35 cents. For the full fiscal year, the company continues to expect net sales of $315 million to $330 million and diluted earnings per share of $1.33 to $1.46.