Activewear specialist Delta Apparel has swung to a first quarter profit of $0.7m, compared to a net loss of $1.5m in the prior year, helped by higher sales, improved inventory levels and better margins.

Its net sales for the three months ended 27 September were $91.4m, an increase of $18.9m, or 26.0%, from last year's first quarter.

Gross margins increased 320 basis points to 21.1% compared to 17.9% last time.

The first quarter of last year included $2.0m of restructuring related expenses, which lowered the gross margin by around 270 basis points.

Robert W Humphreys, president and chief executive officer, said: "First quarter results exceeded our internal expectations and we are on track to achieve our fiscal year 2009 expectations.

"Demand for our portfolio of apparel products appears solid despite reduced retail open to buy dollars."

The company's retail-ready segment, which consists of the Soffe and Junkfood businesses, reported a 36.6% sales increase to $41.4m.

While its activewear segment, comprised of the Delta and FunTees businesses, reported sales of $50.0m for the three months, an 18.4% increase.

For the fiscal year to 27 June 2009, the company reiterated its expectation for net sales in the range of $340 to $360m, compared to $322.0m in fiscal 2008.

The company added it remained concerned about the general slowdown of the US economy and consumer demand for apparel, noting that the difficult retail climate has led to higher than normal bankruptcy rates by apparel retailers.