US: Delta Apparel swings to FY loss on charges
Higher demand for its Junkfood and FunTees brands helped activewear maker Delta Apparel Inc to record fourth quarter and full year revenues, but restructuring charges pushed it to a full-year loss.
For its fourth quarter ended 28 June, net income jumped to $4.3m, or $0.50 per share, of $0.7m, or $0.08 per diluted share in the same period last year.
Quarterly net sales soared 14.7% to $105.3m, with both the activewear and retail-ready segments seeing sales growth in all business units.
The retail-ready segment, consisting of the Soffe and Junkfood businesses, reported a 14.6% rise in fourth quarter sales to $49.6m, while the activewear segment, comprised of Delta and FunTees, saw sales up 14.9% to $55.7m.
For the fiscal year Delta Apparel swung to a net loss of $0.5m, or $0.06 per share, from a profit of $6.3m, or $0.73 per share, the year before.
The results for 2008 include a $0.39 a share impact from restructuring charges and a $0.06 per share bad debt expense associated with the bankruptcy filings of two customers.
Full-year sales increased 3.1% to $322.0m from $312.4m million in the prior year.
Gross margin for the year declined to 20.1% from 23.4%, on higher raw material, energy and transportation prices.
"Demand for our apparel products exceeded expectations during the quarter resulting in record fourth quarter and full year revenues," said Robert W Humphreys, president and chief executive officer.
"We continued to improve the productivity of the sewing and printing facilities acquired in the FunTees acquisition, while also lowering our costs in our other offshore sewing facilities.
"Our new Honduran state-of-the-art textile plant, Ceiba Textiles, met its production goal of 500,000 pounds per week and is continuing to increase production.
"We will remain focused on cost savings and quality improvements in our manufacturing operations in the upcoming year."
In its guidance for fiscal 2009, the company expects net sales to be in the range of $340m to $360m and earnings of $0.70 to $0.90 per share.
But it says it remains concerned about the general slowdown of the US economy and consumer demand for apparel, including higher than normal bankruptcy rates by apparel retailers.
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