Activewear and lifestyle clothing maker Delta Apparel expects to report a 6% decline in second-quarter net sales compared to last year amid the Covid-19 outbreak, but says the impact is mitigated by sales through channels that have not been significantly impacted by the pandemic.

In its preliminary results statement for the 2020 second quarter today (17 April), the firm said it anticipates net sales to total US$96.7m, which represents a 6% decrease compared to $102.8m in the year-ago period. Prior to the March impact of Covid-19, Delta Apparel was on pace to achieve sales growth of about 9% for the quarter ended 28 March.

Meanwhile, the company anticipates second-quarter earnings per share to be within a range of $0.16 to $0.18 compared to $0.13 last year.

CEO Robert Humphreys said gross margins "meaningfully expanded" during the second fiscal quarter, despite what he called some discrete costs last month as the firm temporarily closed some manufacturing operations in countries where the government mandated country-wide shutdowns. 

"During the March quarter, we expensed approximately $2m in costs associated with these plant curtailments, reducing our earnings by approximately $0.20 per diluted share. Adjusting for these discrete expenses, our earnings would have been in the range of $0.36 to $0.38 per diluted share," he said.

Humphreys added all businesses are currently operating in an "unprecedented and difficult environment" and hailed Delta Apparel's diversification of sales channels and broad geographic footprint. 

"Through the disruptions that have taken place worldwide, we have been able to stay open and operate our business with current inventory levels sufficient to service customers in the near-term. Although sales in many of our distribution channels, including traditional retailers and our own branded stores, are considerably lower or even curtailed, we are seeing positive results in other areas of our business."

About 25% of the firm's business is generated through sales channels that have not been significantly impacted by Covid-19, including its e-commerce sites, DTG2Go, and military businesses. 

"In fact, in April we are actually seeing meaningful acceleration in our branded direct-to-consumer e-commerce sites and in our DTG2Go on-demand business," Humphreys said. "Customers are clearly seeing the benefits and the uniqueness of our fully-integrated and diversified geographic digital printing model, and we are gaining share in this market."

Delta Apparel will release the financial results for its fiscal 2020 second quarter after the market close on 30 April.