• Q1 profit fell 38.5% to $1.6m
  • Net sales climbed 8.9% to $107.9m
  • "Concerned about challenging economic conditions" 

Casual and athletic clothing maker Delta Apparel Inc has seen its first quarter profit fall by 38.5% after acquisition costs and marketing spend offset higher sales.

And even though the company reiterated its guidance for the year, it said it is "concerned about the challenging economic conditions which continue to impact consumer demand for apparel." In addition, volatile cotton prices, global yarn shortages and limited capacities in cargo freight have created further challenges, it said.

The warning came after net income for the three months to 2 October fell to $1.6m or $0.19 per share, from $2.6m or $0.30 per share in the prior year period.

Net sales climbed 8.9% to $107.9m, helped by growth in both the Retail-Ready apparel segment, where sales rose 12.3% to $58.4m, and the Activewear apparel segment, where revenues rose 5.1% to $49.5m. 

The company, whose units include MJ Soffe, Junkfood Clothing, and To The Game, acquired Art Gun and The Cotton Exchange during the quarter.

"The positive sales trends we saw at the start of the quarter slowed as we headed into September," noted CEO Robert Humphreys.

"We believe the concern about consumer demand for apparel products, particularly with regard to the upcoming holiday selling season, has caused retailers to take a more cautious approach to their near-term inventory commitments.

"This, coupled with the significant rise in cotton prices and uncertainty about its long-term impact, has added pressure to an already weak marketplace."

But he said the company is on track to reach its full year targets of net sales of $455m to $465m and earnings in the range of $1.55 to $1.70 per share.