Delta Apparel, Inc. (NYSE American: DLA), a leading provider of
core activewear and lifestyle apparel products, today announced
preliminary results for its 2020 fiscal third quarter ended June
27, 2020 and provided a business update.
Robert W. Humphreys, the Company’s Chairman and
Chief Executive Officer, commented, “The momentum we have
experienced across our business segments as the third quarter
progressed is encouraging and further validates Delta Apparel’s
strategic advantages, including our diversification of sales
channels, our broad geographic footprint, and the strong emotional
connection our Salt Life and Soffe brands have with
consumers. During the last few months we have seen orders
accelerating and coming from a broader base of sales channels.”
The Company anticipates net sales for the third
quarter of its 2020 fiscal year to be approximately $72 million, or
60% of net sales of $119.3 million in the prior year period. The
Company’s monthly sales performance sequentially accelerated
throughout the third quarter from April sales at 32% of prior year
levels to June sales tracking at about 90% of prior year
levels.
The third quarter sales performance included 32%
sales growth in the DTG2Go digital print business, driven by the
onboarding of several new customers to the DTG2Go platform as well
as additional print volume from existing customers. As previously
announced, the Company plans to expand its digital print business
with the opening of a new integrated digital print and distribution
facility in Phoenix, Arizona in August, combining DTG2Go’s digital
print capabilities with Delta Apparel’s own supply of garments. The
Company also plans to increase its fleet of digital printers by
10%.
Mr. Humphreys commented, “In our DTG2Go
business, the benefits and the uniqueness of our fully-integrated
and diversified geographic model is building volume with existing
customers, while attracting new customers to our comprehensive
digital print platform. We are thrilled to be in a position to
continue to invest in this strong growth business which is
perfectly positioned to thrive in the digital economy.”
During the third quarter, direct-to-consumer
sales significantly increased for the Company, including e-commerce
sales that more than doubled compared to prior year, led by sales
growth of over 140% on the Salt Life ecommerce site and 80% on the
Soffe consumer site.
Mr. Humphreys commented, “We have really enjoyed
connecting directly with our loyal Salt Life and Soffe consumers
through social media channels and on our e-commerce sites, as well
as in our retail stores which have all now safely reopened. It is
also promising to see net sales for the Salt Life Group return to
mid-single digit growth in the month of June, as our retail
partners started to re-open their doors in the back half of the
quarter.”
“The third quarter was unprecedented for our
nation, our industry, and our Company,” Mr. Humphreys continued. “I
am so very proud of our teams across all our businesses for their
unwavering dedication throughout the pandemic, and of the
significant progress we have collectively made to service our
diverse customer base. While our non-U.S. manufacturing
operations were closed for most of the quarter, we are encouraged
that by the end of June we had resumed production at all of our
manufacturing plants. In accordance with local regulations,
we have implemented strict safety protocols and will operate at a
reduced capacity in the near term for the safety of our employees
and to align our production levels with anticipated future
business.”
The Company expects to record approximately $24
million of non-recurring expense during its fiscal 2020 third
quarter associated with impacts from the COVID-19 pandemic.
These include costs related to the curtailment of its manufacturing
operations and increased reserves related to the heightened risks
in the market as the U.S. continues its recovery.
Mr. Humphreys concluded, “We look forward to
providing a more comprehensive review of our third quarter results
during our earnings call on Thursday, July 30, 2020. Our
business is recovering much quicker than we originally anticipated,
and we believe this momentum will continue, allowing us to return
to profitability in our September quarter. Each month our
liquidity has continued to improve, resulting in a nearly 50%
increase in our cash on hand and availability under our credit
facility at June compared to the March levels. I remain
confident Delta Apparel is in a solid financial position to emerge
from this pandemic stronger, and we are ready to profitably grow
our business.”
Third Quarter Fiscal 2020 Conference CallFinal
and complete financial results for the fiscal year 2020 Third
quarter ended June 27, 2020, will be released after the market
close on July 30, 2020. At 4:30 p.m. ET on that day, the
Company will also hold a conference call with senior management to
discuss its financial results and business outlook. The
Company invites you to join the call by dialing 800-430-8332. If
calling from outside the United States, please dial 323-289-6581. A
live webcast of the conference call will be available at
www.deltaapparelinc.com. Please visit the website at least 15
minutes early to register for the teleconference webcast and
download any necessary software. A replay of the call will be
available through August 30, 2020. To access the telephone replay,
participants should dial toll-free 844-512-2921. International
callers can dial 412-317-6671. The access code for the replay is
1181871.
About Delta Apparel, Inc.Delta
Apparel, Inc., along with its operating subsidiaries, DTG2Go, LLC,
Salt Life, LLC, and M.J. Soffe, LLC, is a vertically-integrated,
international apparel company that designs, manufactures, sources,
and markets a diverse portfolio of core activewear and lifestyle
apparel products under the primary brands of Salt Life®, COAST®,
Soffe®, and Delta. The Company is a market leader in the
direct-to-garment digital print and fulfillment industry, bringing
DTG2Go technology and innovation to the supply chain of its
customers. The Company specializes in selling casual and athletic
products through a variety of distribution channels and tiers,
including outdoor and sporting goods retailers, independent and
specialty stores, better department stores and mid-tier retailers,
mass merchants and e-retailers, the U.S. military, and through its
business-to-business e-commerce sites. The Company’s products are
also made available direct-to-consumer on its websites at
www.saltlife.com, www.coastapparel.com, www.soffe.com and
www.deltaapparel.com as well as through its branded retail stores.
The Company’s operations are located throughout the United States,
Honduras, El Salvador, and Mexico, and it employs approximately
8,400 people worldwide. Additional information about the Company is
available at www.deltaapparelinc.com.
Cautionary Note Regarding
Forward-Looking StatementsThis press release may contain
“forward-looking” statements that involve risks and uncertainties.
Any number of factors could cause actual results to differ
materially from anticipated or forecasted results, including, but
not limited to, the volatility and uncertainty of cotton and other
raw material prices and availability; the general U.S. and
international economic conditions; competitive conditions in the
apparel industry; restrictions on our ability to borrow capital or
service our indebtedness; deterioration in the financial condition
of our customers and suppliers and changes in the operations and
strategies of our customers and suppliers; changing consumer
preferences or trends; our ability to successfully open and operate
new retail stores; changes in economic, political or social
stability at our offshore locations; significant interruptions
within our manufacturing or distribution facilities or other
operations; our ability to attract and retain key management;
significant changes in our effective tax rate; interest rate
fluctuations increasing our obligations under our variable rate
indebtedness; the ability to raise additional capital; the ability
to grow, achieve synergies and realize the expected profitability
of acquisitions; the volatility and uncertainty of energy, fuel and
other costs; material disruptions in our information systems;
compromises of our data security; significant litigation in either
domestic or international jurisdictions; recalls, claims and
negative publicity associated with product liability issues; the
ability to protect our trademarks and other intellectual property;
and the other factors set forth in the "Risk Factors" contained in
our most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission and as updated in our
subsequently filed Quarterly Reports on Form 10-Q. Except as may be
required by law, Delta Apparel, Inc. expressly disclaims any
obligation to update these forward-looking statements to reflect
events or circumstances after the date of this press release or to
reflect the occurrence of unanticipated events.
Company Contact:
Deborah Merrill, 864-232-5200 x6620
investor.relations@deltaapparel.com
Investor Relations and Media Contact: ICR, Inc.
Investors: Tom Filandro, 646-277-1235
Media: Jessica Liddell, 203-682-8208 DLAPR@icrinc.com
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