Delta FunTees segment sales rise
Delta Apparel Inc reported financial results for its fourth quarter and full fiscal year ended June 28, 2008.
Fourth Quarter Results:
Net sales for the three months ended June 28, 2008, were a record $105.3 million, an increase of 14.7% from the prior year's fourth quarter. Both the activewear and retail-ready segments had record sales driven by sales growth in all business units.
Gross margins increased 330 basis points to 23.9% compared to 20.6% in the prior year's fourth quarter. The prior year's fourth quarter included $5.4 million, or 700 basis points, of restructuring related charges in cost of sales.
Excluding the effect of the prior year's restructuring related charges, higher raw material prices, increased energy and transportation costs, along with changes in the mix of products sold lowered the overall margins.
The Company incurred higher bad debt expense in the fourth fiscal quarter compared to the prior year quarter due to the bankruptcy filings of two customers, resulting in an increase in accounts receivable reserves of $0.8 million.
Net income for the fourth quarter was $4.3 million, or $0.50 per diluted share, inclusive of ($0.06) per diluted share related to higher receivable reserves from the customer bankruptcy filings.
This exceeds the Company's previously announced expectations of $0.45 to $0.49 per diluted share. This compares to the prior year fourth quarter net income of $0.7 million, or $0.08 per diluted share, inclusive of ($0.51) per diluted share of restructuring related expenses.
Fiscal Year 2008 Results:
Fiscal year 2008 net sales increased 3.1% to a record $322.0 million compared to $312.4 million in the prior year. The prior year included results from the FunTees business since its acquisition on October 2, 2006.
Gross margin for the year ended June 28, 2008 declined to 20.1% compared to 23.4% in the prior year due primarily to higher raw material, energy and transportation prices.
For fiscal year 2008, the Company reported a net loss of $0.5 million, or ($0.06) per diluted share, which included a ($0.39) per diluted share impact from the restructuring related charges and ($0.06) bad debt expense associated with the bankruptcy filings of two customers.
This compares to net income for fiscal year 2007 of $6.3 million, or $0.73 per diluted share, including restructuring related charges of ($0.51) per diluted share and $0.08 per diluted share resulting from the extraordinary gain associated with the final earn-out payment made to the former M. J. Soffe shareholders.
Robert W. Humphreys, President and Chief Executive Officer, commented, “Overall we were pleased with our fourth quarter results and the operational improvements we made during the year.
Demand for our apparel products exceeded expectations during the quarter resulting in record fourth quarter and full year revenues. We continued to improve the productivity of the sewing and printing facilities acquired in the FunTees acquisition, while also lowering our costs in our other offshore sewing facilities.
Our new Honduran state-of-the-art textile plant, Ceiba Textiles, met its production goal of 500,000 pounds per week and is continuing to increase production. We will remain focused on cost savings and quality improvements in our manufacturing operations in the upcoming year.”
The retail-ready segment, comprised of the Soffe and Junkfood businesses, reported a 14.6% sales increase to $49.6 million for the fourth quarter of fiscal year 2008 compared to $43.3 million in the prior year fourth quarter.