Gross margins also experienced a downturn, coming in at 10.9 per cent compared to 12.7 per cent in the prior year, primarily due to production curtailments. When adjusted for the cost impacts of these curtailments, gross margins for the first quarter were somewhat steadier at 12.6 per cent. The Delta Group segment saw gross margins reduce to 5.8 per cent from 7.8 per cent, and the Salt Life Group segment witnessed a decrease from 57 per cent to 45.4 per cent, Delta Apparel said in a press release.

The company managed to slightly decrease its selling, general, and administrative expenses from $18.9 million to $18.6 million.

Operating losses widened, moving from a $2.6 million loss in the prior year to a $4.9 million loss in Q1 FY24. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) also indicated a loss of $1.3 million. Furthermore, the net loss for the quarter escalated to $8.5 million, or $1.22 per share, up from a net loss of $3.6 million, or $0.51 per share, in the previous year.

Delta Apparel reported a sequential decrease in net inventory to $196.3 million as of December 30, 2023, marking an 8 per cent reduction from September 2023 and a 24 per cent decrease from December 2022.

Chairman and chief executive officer Robert W Humphreys said: “Many of the unfavourable market dynamics we saw across our business and the activewear industry last year persisted during our first quarter. We continued to take decisive action to improve our balance sheet and streamline our cost structure and operations. Our debt and inventory levels were down more than 20 per cent year-over-year, and we are very near completion of our plan to reduce our offshore manufacturing footprint down to two countries and consolidate production in our more efficient Central American platform.

“We completed similar consolidation work in our DTG2Go digital print business and significantly reduced other areas of our workforce to better align our cost structure with the lower demand we continue to see across much of our business.”

Fibre2Fashion News Desk (DP)