Delta sees improved margins in activewear segment
Delta Apparel, Inc. reported sales growth of 8.4% and a per share earnings increase of 275% for its first quarter ended September 26, 2009 compared to the prior year first quarter.
First Quarter Results
Net sales for the three months ended September 26, 2009 were $99.1 million, an increase of 8.4% from the prior year first quarter. The Company's retail-ready segment reported a sales increase of 25.5% compared to the first quarter of fiscal year 2009, while its activewear segment reported a sales decline of 5.7%. Gross margins increased 280 basis points to 23.9% compared to 21.1% in the prior year first quarter. The improvement in gross margin was primarily due to a higher mix of retail-ready sales and improved margins in the activewear segment.
Activewear gross margins improved 370 basis points from the prior year first quarter, and were partially offset by a gross margin decline in the retail-ready segment. Net income for the quarter ended September 26, 2009 increased $1.9 million, or 283.2%, to $2.6 million, or $0.30 per diluted share, compared with first quarter earnings of $0.7 million, or $0.08 per diluted share, in the prior year.
Robert W. Humphreys, Chairman and Chief Executive Officer, commented, “As we begin the new fiscal year, we continue to capitalize on the strengths of our business, including the power of our brands, creative graphic talent, strong customer relationships and diverse distribution channels, to generate top-line growth.
At the same time, we are driving improved profitability by providing more of the services our customers desire, including decoration and retail packaging, while lowering our product costs through our flexible manufacturing platform. Despite the difficult and uncertain marketplace conditions, we see continued opportunities to grow sales while sustaining our profitability as the fiscal year unfolds.”
The retail-ready segment, comprised of the Soffe, Junkfood and To The Game businesses, had sales of $52.0 million, a 25.5% increase from the prior year first quarter. To The Game, our headwear company acquired during the fourth quarter of fiscal year 2009, added $6.0 million in sales in the first quarter of fiscal year 2010. Sales at Junkfood grew 48.7% from the prior year first quarter, driven primarily from its successful relationship with GAP, Inc. The additional revenue from To The Game and increased sales at Junkfood were partially offset by a 6.9% decline in revenue at Soffe resulting from lower sales to the military.
The prior year first quarter revenues included additional sales to the military from the initial rollout of the new Navy PT uniform. Excluding the impact of this initial rollout, sales at Soffe would have increased by 3.1%, driven from double-digit growth in both its retail channel and sales of Intensity® products. Operating income in the retail-ready segment was $5.6 million for the first fiscal quarter of 2010, an increase of $0.1 million from the prior year first quarter.