Delta Apparel, Inc, a leading US-based provider of core activewear and lifestyle apparel, has reported a sharp fall in net sales in the second quarter of fiscal 2024 (Q2 FY24), which dropped to $78.9 million from $110.3 million in the same period last year.

The Delta Group segment, which forms a substantial part of the company's business, saw its net sales decrease dramatically to $63.4 million from $91.3 million in the prior year. This decline was attributed mainly to production curtailments. Similarly, the Salt Life Group segment also experienced a downturn, with sales falling to $15.5 million from $18.9 million, the company said in a press release.

A more concerning indicator was the company’s gross margin, which plummeted to 4.3 per cent, a steep decline from 14.7 per cent in the previous year. The Delta Group segment was primarily affected, while the Salt Life Group's gross margin also saw a reduction, dropping to 47.5 per cent from 59 per cent.

Operating costs, however, painted a slightly different picture. Selling, general, and administrative expenses decreased slightly from $19.3 million to $17.9 million. Despite this reduction, selling, general, and administrative expenses as a percentage of sales rose to 22.8 per cent due to the lower sales volume.

The financial strains culminated in an operating loss of $24.4 million, a significant increase from a loss of $5.3 million in the prior year. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) also reflected these challenges, recording a loss of $20.9 million.

The net loss for the quarter was deeply concerning at $36.3 million, or $5.15 per share, which steeply rose from a net loss of $7.0 million, or $1.00 per share, a year earlier. The adjusted net loss stood at $17.8 million, or $2.53 per share.

Inventory levels showed a marked reduction, with net inventory as of March 30, 2024, standing at $156.9 million. This represents a year-over-year decrease of 35 per cent from $243.2 million in March 2023, and a significant drop of almost 40 per cent from $258.9 million at the end of December 2022.

Fibre2Fashion News Desk (DP)

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