Delta Apparel sees third-quarter net income drop

US: Delta Apparel sees third-quarter net income drop

By Petah Marian | 27 April 2012

Delta Apparel has reported a drop in third-quarter profit as customers destocked its basic T-shirts in anticipation of lower prices on the back of easing cotton costs.

The company reported US$1.9m net income for the quarter ended 31 March against $5.7m in the same period of the prior year. Sales increased slightly to $125.5m from $125m in the prior year.

The company said the destocking behaviour in its Delta Catalog and Soffe businesses drove promotional pricing in the marketplace that negatively impacted revenue and margins.

Branded segment sales increased 7.7% to $58.5m. Basics saw a 5% decline in sales to $67m.

Chairman and CEO Robert Humphreys said while he is disappointed in the results, economic and apparel marketplace improvements that are just beginning to happen warrant cautious optimism.

"The inordinate cotton price increases of 2011 that created so much turmoil in the marketplace are now moderating. As the higher inventories in the marketplace are worked through, sales volumes should return to a more normal growth pattern, pricing should stabilise, and we would envision a better business environment going forward," he said.

Sectors: Apparel, Finance

Companies: Delta Apparel