Delta Apparel Inc. reported a 5.4 percent drop in quarterly sales and pointed to unexpected weather and the bankruptcy of Sports Authority Inc. as underlying causes.
While net sales for the blank T-shirt manufacturer’s first fiscal 2017 quarter, ended Dec. 31, slid to $85.3 million from $90.2 million a year ago, Delta’s operating income fell to $469,000 from $2.2 million and the company posted a net loss for the quarter of $607,000 compared to a net income of $681,000 at the start of last year.
Delta chief executive officer Robert W. Humphreys cited hurricane Matthew, which in early fall hit the southeastern U.S. and areas of the Western Atlantic, along with the closure of the Sports Authority stores, one of its bigger retailers, as cause for the sales dip.
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He added that neither incident should “have a lasting effect on the future growth of Delta Apparel” and said some actions have already been taken to support growth going forward and maximize 2016’s “record holiday volumes.”
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“We remain focused on those activities that have a continuing positive impact on our top and bottom lines, and on measures that will improve efficiency and service for our customers while expanding our gross margins,” Humphreys said.
The company is also expected its activewear business to improve over the next several quarters, despite a 3.1 percent drop in the first fiscal quarter, which was driven by declines in business license accounts and destocking by retailers.
Delta’s Salt Life grew 3.8 percent during the quarter, however, a record first-quarter profit for the beach gear line that also means quarter-over-quarter growth for the line.
“While we see the challenging retail environment continuing, we believe fiscal 2017 will be a year of growth and improved profitability for Delta Apparel,” Humphreys added. “We entered the year with exciting new products, have lowered our manufacturing and distribution costs, and are adopting innovative ways to serve our customers.”