News February 08, 2023
Delta Apparel Posts Q1 Loss, Sales Decline
Lower demand in a key business channel and inflationary pressures weighed on the Top 40 supplier.
Delta Apparel’s (asi/49172) fiscal year got off to a bumpy start, with the Top 40 promotional products supplier just reporting year-over-year declines in sales and gross profit during its first quarter, as well as an overall loss of about $3.6 million, or -$0.51 per share, for the three-month period ended Dec. 31, 2022.
Total global net sales across all business channels, which includes but isn’t limited to business in the promo products/apparel decorating market, reached $107.3 million, down 3% from the same quarter the prior year. Fiscal year Q1 revenue from last year was a first-quarter record for Delta Apparel – about $110.7 million.
In this year’s first quarter, gross profit tallied $13.6 million, a 40% year-over-year retreat. Operating income declined from $5.9 million, or 5.3% of sales, to an operating loss of $2.59 million.
Delta Apparel’s Delta Direct division services the screen print, promotional products and e-retailer markets, as well as retail licensing customers that sell through to mid-tier and mass market retailers.
Executives said that the Q1 performance was “heavily impacted by reduced demand in the mass retail supply chain served by our Delta Direct channel and the inflationary cotton and other input costs evident across the industry. The manufacturing shutdowns that we, like many of our competitors, initiated during the quarter to recalibrate production output also impacted the bottom line.”
There were positives, though. Executives noted that Delta Apparel increased sales in four of its five go-to-market channels. DTG2Go, a print-on-demand business, posted record first-quarter sales with growth of nearly 20%, for instance.
“We’ve been very intentional over the years in building agility and market diversity into our business, and our topline performance nearing last year’s record first-quarter sales in a much lower demand environment for basic tees this time around highlights our team’s ability to execute on that strategy,” said Delta Apparel CEO Robert W. Humphreys.
Based on estimated 2021 North American promotional product revenue of $46.7 million, Delta Apparel ranked 34th on Counselor’s most recent list of the largest suppliers in the industry.