Delta Apparel Inc reported financial results for its second fiscal quarter ended December 30, 2006. The Company's results for the fiscal 2007 second quarter include the operations of FunTees, which was acquired on October 2, 2006. The Company's results are in-line with the preliminary results announced on January 8, 2007.
Net sales for the three months ended December 30, 2006 increased 26.4% to a second quarter record of $72.9 million compared to $57.7 million in the prior year's second quarter. The increase was primarily due to the addition of FunTees and strong sales in the Soffe business, offset by lower sales in the Delta catalog and Junkfood businesses. Net income for the second quarter was $0.6 million, or $0.07 per diluted share, compared to the prior year's level of $2.4 million, or $0.27 per diluted share.
Gross margins for the fiscal second quarter were 22.1% as compared to 31.7% in the prior year second quarter principally as a result of higher raw material prices, lower sales in the higher margin Junkfood business and additional costs incurred from FunTees' integration into Delta's textile operations.
The inclusion of FunTees also reduced overall gross margins for the second quarter as sales from its private label business carry lower margins than the Company's branded businesses. Margins are expected to increase in the FunTees business as the transition to Delta's textile facility is completed in the current fiscal year.
SG&A expenses for the fiscal 2007 second quarter decreased to 18.7% of sales compared to 23.9% of sales in the prior year period due to the lower selling, general and administrative costs associated with FunTees and lower management incentive costs.