• Q3 profit doubles to $4.4m
  • Sales down 2.4% to $120.5m
  • Company says it has “turned the corner”

US clothing business Delta Apparel doubled its net profit in the third quarter, despite lower sales, thanks to improved margins and cost reductions.

Net income reached US$4.4m for the three months to 27 June, compared to $2.2m in the same period a year ago. Sales fell 2.4% to $120.5m from $123.5m last year. Excluding the impact of the recent sale of the company's The Game branded business, sales climbed 1.7%.

Sales in the basics segment rose 4.2% to $79m, driven by solid performances in activewear and Art Gun, its e-commerce business specialising in customised apparel. Activewear sales increased 3.6% year-on-year, driven by 12.7% growth in the private label business. Art Gun sales jumped to 26.2% to $2.9m.

However, the branded segment reported a 13% decline in sales to $41.5m, weighed down by the removal of $5m in revenue due to the sale of The Game branded business.

Junkfood sales were up on last year, while Soffe sales were generally flat with the prior year, with fewer close-out sales compared to the prior year. Sales of Salt Life products were lower than expected, rising 4.1% compared to the prior year.

Gross margins continued to strengthen both on a sequential basis from the prior quarter and year-on-year.

"We are pleased that Delta Apparel not only turned the corner in terms of sales and net income growth, but showed vast improvement in other areas such as gross margin development, general and administrative cost reductions, and operating margin expansion," said chairman and CEO Robert Humphreys.

"The strategic initiatives that we began implementing twelve months ago have proven successful in regards to cost savings, efficiency, profit growth, and better service to our customers."