The decrease in net sales was observed across all segments of Delta Apparel and in the Salt Life Group segment, net sales amounted to $17.2m, compared to $20.9m in Q3 FY22.
The retailer said the Salt Life Group sales were skewed by “significant” sales taking place in the prior third quarter due to transportation delays. Despite this, the Salt Life business achieved “outstanding growth” online and is expanding with two new retail locations in New York.
Similarly, in the Delta Group segment, net sales were $89.1m, down from $106m in the same quarter of the previous fiscal year, Q3 FY22.
The US retailer saw gross margins drop to 13.1% from 24.2% in the prior year period.
Key results from Delta Apparel Q3:
- Net sales were $323.9m compared to the prior year period of $369.3m
- Operating income declined year-over-year from $9.3m to an operating loss of $4.5m
- Net income took a hit declining from $6.2m to a loss of $6.3m.
Chairman and CEO Robert W. Humphreys commented: “We saw encouraging indications throughout the quarter that the two major trends impacting both our business and the entire industry this year - elevated cotton pricing and demand destruction from high inventory levels in the retail supply chain - are receding and we are moving into a more normalised operating environment.”
He believes the company's decision in the previous year to decrease production levels and purchase less price-inflated cotton, “proved to be strategically sound, but the significant one-time cost impacts of that decision greatly impacted our operating results this quarter and year-to-date.”
Going forward, Humphreys expressed optimism and expects: “steady improvement in our operating results as we close out our fourth quarter and move into our next fiscal year.”
For the fiscal year 2024, the company has set its sights on achieving net sales ranging between $410m and $425m, with operating profit margins projected to fall within the range of 3.25% and 4.25%.
Humphreys added this will be “with sequentially improving gross margins and operating profit as well as topline growth in the back half of the year.”
