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Delta Apparel Inc (DLA) filed Quarterly Report for the period ended 2011-12-31.
Delta Apparel Co. has a market cap of $131.2 million; its shares were traded at around $15.48 with a P/E ratio of 30.4 and P/S ratio of 0.3. Delta Apparel Co. had an annual average earning growth of 3.9% over the past 10 years. GuruFocus rated Delta Apparel Co. the business predictability rank of 2-star.
This is the annual revenues and earnings per share of DLA over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of DLA.
Highlight of Business Operations:
On January 10, 2012, due to the effect of the inventory markdown and selling price discounts on the second quarter and first six months, we reduced our fiscal year 2012 outlook for sales and earnings. For the fiscal year ending June 30, 2012, we anticipate net sales to be in the $480 million to $500 million range and earnings to be in the range of $0.50 to $0.60 per diluted share.Net sales for the quarter ended December 31, 2011 were $105.5 million, an increase of 0.7% compared to the quarter ended January 1, 2011. Sales in the basics segment increased 2.4% to $57.6 million during the second quarter of fiscal year 2012 compared to $56.2 million for the same period of the prior year. The increase was due to 36% growth in the FunTees business from private label programs with new customers, as well as higher volumes and pricing with existing customers. This was partially offset by sales declines in the undecorated basic tee business principally from lower unit sales. Sales in the branded segment were $47.9 million, down 1.2% from the prior year second quarter. Sales of vintage tees, along with Salt Life(R) branded products, grew during the quarter, but were offset by greater than expected fall-off in demand for Soffe products.
Sales for the first six months of fiscal year 2012 were $229.0 million, a $16.4 million, or 7.7%, increase over the same period of the prior year. Both the basics and branded segments contributed to the organic sales growth, with sales increases of 4.1% and 11.2%, respectively, in the first six months of fiscal year 2012 over the same period in fiscal year 2011.
Gross margins for the second quarter of fiscal year 2012 were 0.1% of sales compared to 20.9% of sales in the prior year second quarter. During the quarter ended December 31, 2011, demand for basic, undecorated tees weakened and selling prices declined significantly. The disparity between the lower selling prices and the high product costs from high cost cotton associated with units sold during the quarter negatively impacted gross margins by $3.2 million. In addition, we recorded a $16.2 million one-time adjustment during the quarter to lower the value of the remaining inventory on hand in this business, bringing the total impact on our second quarter results to $19.4 million. In addition, increased pricing to offset higher cotton costs resulted in decreased volumes and slightly lower margins overall in the branded segment during the quarter. Gross margins for the first six months of fiscal year 2012 were 13.7% of sales compared to 22.5% in the prior year period. As a result of the inventory markdown recorded in our 2012 second fiscal quarter, we would expect margins in the basic, undecorated tee business to be free from the effects of high cotton prices flowing through cost of sales for the remainder of fiscal year 2012. Our gross margins on branded and private label sales will, however, continue to be pressured in the third and fourth quarters as product with higher cotton costs is sold. Our gross margins may not be comparable to other companies because some companies include costs related to their distribution network in cost of goods sold and we exclude a portion of those costs from gross margin and instead include them in selling, general and administrative expenses.
For the quarter ended December 31, 2011, selling, general and administrative expenses were $20.2 million, or 19.1% of sales, compared to $20.1 million, or 19.2% of sales, for the quarter ended January 1, 2011. Selling, general and administrative expenses for the six months ended December 31, 2011 were $44.7 million, or 19.5% of sales, compared to $42.9 million, or 20.2% of sales for the six months ended January 1, 2011, reflecting the continued leveraging of our fixed general and administrative costs. In addition, prior year expenses included costs associated with the acquisition of The Cotton Exchange and expenses related to the start-up of Art Gun that were not repeated during the current year.
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