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Delta Apparel's gross profit jumps 7.1% in Q1 FY20

Feb '20
Pic: Delta Apparel
Pic: Delta Apparel
Delta Apparel, a leading provider of core activewear and lifestyle apparel products, reported decrease in net sales by 5.7 per cent to $95.9 million in Q1 FY20, compared to same period last year. Gross profit for Q1 increased 7.1 per cent to $19.9 million. Net income for Q1 was $0.9 million, compared to a net loss of $1.1 million, in the prior year period. 
Net sales in the Delta Group segment and Salt Life Group segment decreased 5.8 per cent and 4.7 per cent for Q1 which ended on December 28, 2019. 
The company reported their Q1 sales results were impacted by the shortened holiday calendar combined with an earlier shipping cut-off for in-hands holiday receipts.
Selling, general and administrative (SG&A) expenses as a percentage of sales was 18.8 per cent, compared to 16.5 per cent in the prior year first quarter.
Operating income for the quarter was $2.6 million compared to $41,000 in the prior year first quarter, which included a $2.5 million discrete expense in connection with the resolution of litigation surrounding a 2016 customer bankruptcy. 
The company reported that their investments in new manufacturing technologies, speed-to market distribution strategies, and additional sales channels continue to generate growth opportunities across the businesses. To accelerate momentum in company's DTG2Go (Delta Apparel's digital print subsidiary) and Salt Life businesses, in the Q1 FY20, company launched a full-service, vertical distributor model in their Activewear business which includes a broad offering of nationally recognised branded products comprised of polos, outerwear, headwear and accessories.
Delta Apparel's newest Salt Life store, which opened during Q1 in Key West, Florida, is reported to be performing exceptionally well and it contributed to the strong direct-to-consumer results. The company plans to open an additional store later this month in Charleston, South Carolina, which will provide them with nine branded retail stores. 
Company is also reported to be focused on building their foundational capabilities and expertise to best serve their existing customers, while also attract new customers. The diversification of their customer base and expansion of sales channels, including this quarter's launch of their full service, vertically-integrated distributor model, remain key pillars of the success and fuels the growth for their business ahead.

Fibre2Fashion News Desk (JL)

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