US: Delta slips to Q2 loss on markdown
- Q2 net loss of US$13.6m, versus $1.4m profit
- Sales up 0.8% to $105.5m
- Blames cotton costs for $16.2m markdown
Delta Apparel suffered a second quarter net loss despite a slight sales increase, thanks to a one-off inventory markdown of US$16.2m.
The T-shirt and headgear specialist blamed the markdown on record high cotton costs, combined witih selling price discounts in basic undecorated T-shirts.
Branded segment sales were down 1.2% to $47.9m in the three months to 31 December, while basics increased 2.4% to $57.6m.
Delta chairman and CEO Robert Humphreys said the company was positioned for growth in the second half of the fiscal year due to tough decisions taken in the second quarter.
“Had we not taken the entire markdown in the second quarter, the company would have had to deal with the impact of high cotton prices throughout the remainder of the year,” he added. “We now can focus on growing our operations with the effect of this unprecedented increase in cotton prices behind us.”
As a result of the markdown, Delta reduced its full-year guidance, forecasting sales of $480-500m and earnings per diluted share of $0.50-0.60.
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....
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