Activewear and lifestyle apparel maker Delta Apparel has reported a near-40% drop in net sales for the three months to the end of June but CEO Robert Humphreys says the business is likely to return to profitability in the fourth quarter.

For the third quarter ended 27 June, the company reported net sales of US$71.8m, or about 60% of prior year net sales of $119.3m. 

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Monthly sales performance sequentially accelerated throughout the third quarter from April sales at 33% of prior year levels to June sales at nearly 90% of prior year levels. Net sales in the Delta Group segment and Salt Life Group segment decreased 39% and 47.2%, respectively, from the prior year period.

Net loss for the quarter, meanwhile, amounted to $17.8m, compared to net income of $4.9m last year.

Adjusted gross margins were 21.6%, an 80 basis point improvement over the prior year and attributable to continued efficiencies and process improvements within the Delta Group segment’s integrated vertical manufacturing platform. 

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“With net sales in June tracking at nearly 90% of prior year levels and with further acceleration in July, we are very encouraged by the steep recovery in recent weeks that exceeded our internal expectations,” CEO Robert Humphreys said. “Our DTG2Go business onboarded several new customers and received additional digital print volume from existing customers to deliver over 30% net sales growth for the quarter compared to prior year. In addition, our Catalog and Salt Life businesses returned to growth in June.

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“With all of our manufacturing plants having resumed production and brick and mortar stores returning to more normalised operating hours, we continue to see positive trends that should allow us to return to profitability in the fourth quarter.”