US: Delta Apparel to close US plant, axe 110 jobs
T-shirt and activewear maker Delta Apparel Inc is to close its manufacturing facility in Fayette, Alabama with the loss of 110 jobs, and shift some production to Honduras.
The company says the restructuring of its US textile operations will incur costs of $10.0m, or $0.75 per share, which will hit the fourth quarter of fiscal 2007 and the first half of 2008.
It also expects one-time charges of $0.51 per share in the fiscal fourth quarter. This includes $0.40 per share in costs associated with integrating FunTees, a manufacturer of private label knitted goods, into its existing Maiden facility and opening the Honduran plant, as well as $0.11 per share related to closing the Alabama plant.
Robert W Humphreys, president and CEO, said the relocation of some of the company's domestic manufacturing capacity to Central America "is necessary to be cost-competitive against other global producers.
"We believe our actions will result in improved margins and profitability in fiscal 2008 and beyond."
As a result of the changes, Delta slashed its fiscal fourth-quarter earnings outlook. It now expects earnings for the three months to 30 June to be $0.06 to $0.08 per share, including charges, down from earlier forecasts of $0.50 to $0.55 per share.
It expects revenue of $92m for the fourth quarter, giving a 16% rise in sales for fiscal 2007 to $312m. Full year earnings will be in the range of $0.71 to $0.73 per share, down from previous expectations of $1.15 to $1.20 per share.
The new textile facility in Honduras is due to open in the second quarter of fiscal 2008. Production will grow from 500,000 pounds of fabric per week by the fourth quarter to one million pounds per week by the third quarter of fiscal 2009.
After its reorganisation, Delta Apparel will be left with two US textile operations in North Carolina, one in Maiden and the other in Fayetteville, as well as facilities in Honduras, El Salvador and Mexico.
Mr Humphreys concluded: "The changes we are making should allow us to continue profitable growth in the highly competitive apparel industry.
"We remain encouraged by the opportunities within both our private label and branded apparel businesses."
Delta Apparel, along with its wholly owned subsidiaries, M.J Soffe and Junkfood Clothing, employs around 6,200 people worldwide.
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Activewear manufacturer Delta Apparel has swung to a first quarter loss, blaming tough comparisons with a shareholder payment of $0.7m in the prior year period and textile restructuring costs....
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