Delta Apparel achieves organic sales growth in each unit
Delta Apparel, Inc. reported financial results for its fourth quarter and fiscal year ended June 27, 2009. The Company's results for the fiscal 2009 fourth quarter include the operations of To The Game, which was acquired on March 27, 2009 and are included in the retail-ready segment of the Company.
Fiscal Year 2009 Results
Fiscal year 2009 net sales increased 10.3% to a record $355.2 million compared to $322.0 million for the prior fiscal year. The sales increase was driven by organic growth in each of the Company's four business units as well as the acquisition of To The Game. Gross margin for the year ended June 27, 2009 increased to 21.5% from 20.1% for the prior fiscal year. For fiscal year 2009, the Company reported net income of $6.5 million, or $0.76 per diluted share, compared to a fiscal year 2008 net loss of $0.5 million, or ($0.06) per diluted share, which included a ($0.39) per diluted share impact from restructuring related charges.
Fourth Quarter Results
Net sales for the three months ended June 27, 2009, were $104.7 million, down 0.6% from the prior year's fourth quarter. The addition of headwear sales through the recently acquired To The Game business contributed $6.8 million in sales. This increase in sales was offset by sales declines of $6.4 million, or 12.9%, in the remaining businesses within the retail-ready segment and a $1.0 million, or 1.7%, sales decline in the activewear segment. Gross margins were 23.2% compared to 23.9% in the prior year fourth quarter. Net income for the current year fourth quarter was $4.0 million, or $0.47 per diluted share, compared to net income of $4.3 million, or $0.50 per diluted share, for the prior year fourth quarter.
Robert W. Humphreys, the Company's President and Chief Executive Officer, commented, “In fiscal year 2009 we demonstrated the effectiveness of participating in diverse apparel markets, resulting in strong financial and strategic accomplishments. We are proud to have achieved organic sales growth in each of our business units which contributed to our overall double digit sales increase and solid earnings for the full year. We believe the strength of our brands, expanding license agreements, creative graphic talent, and unique manufacturing and distribution capabilities continue to separate us from our competition and are building market share. At the same time, the acquisition of The Game and Kudzu brands, which we completed early in the fourth quarter, provides us an entrée into new markets and gives us additional platforms for growth in the future. Finally, we continued to enhance our manufacturing efficiency through further consolidation of our factories as well as upgrades to systems and procedures that should result in improved profitability in the future.”
The retail-ready segment, comprised of the Soffe, Junkfood and To The Game businesses, had sales of $50.0 million, consistent with prior year fourth quarter sales. Excluding revenue from To The Game, sales decreased 12.9% as consumer spending remained weak and retailers limited their open-to-buy dollars to reduce their inventory risk. Sales at Soffe declined in its military business, as the prior year included sales from the introduction of the new Navy PT uniform, which resulted in a spike in military sales in the fourth fiscal quarter of 2008. Operating income in the retail-ready segment was $6.4 million for the fourth fiscal quarter of 2009, a decline of $3.0 million from the prior year fourth quarter due primarily to the lower sales and deleveraged fixed costs in the businesses.