Clothing producer Delta Apparel reported a 73% slump in second-quarter profit but reaffirmed its expectations for the full year.

The quarterly slide to US$633,000 was driven by increased raw material costs which eroded margins.

Revenue, however, grew 26.4% to $72.9m from $57.7m a year ago. This growth was helped by the recent purchase of FunTees as well as a good performance at the Soffe unit. The Delta catalogue and Junkfood business suffered from lower sales.

President and CEO Robert W Humphreys said: "As we discussed in early January, we did not achieve our plan for the second quarter as a weaker-than-expected retail environment reduced customer reorders at Junkfood and impacted the sales volume in our active wear business."

Delta forecasts earnings of between $1.33 and $1.46 per share for the full year plus revenue of $315m to $330m.

For the third quarter, the company foresees a profit of 31 cents to 35 cents per share plus a sales rise of 21% to 27% to between $84m and $88m.

Humphreys said the company believes FunTees will add to the performance of the active wear segment during the second half. 

"Our manufacturing operations are focused on continued cost savings and completing the FunTees manufacturing integration," he added.

"The lower-cost structure associated with offshore textiles should improve our profitability and lower working capital requirements. We believe these initiatives will provide us with a strong platform for sales and profitability growth in the future."