Gross margins also reduced to 13.1 per cent from 24.2 per cent in the prior year period. Adjusted gross margins stood at 22.7 per cent. For the Delta Group and Salt Life Group segments, gross margins were reported at 5.9 per cent, down from 19.1 per cent in Q3 FY22, and 50.5 per cent, up slightly from 50.2 per cent in Q3 FY22, respectively, Delta Apparel said in a press release.

The company noted a decrease in selling, general, and administrative expenses to $18.5 million from $22.4 million in the prior year's third quarter. Operating income also decreased YoY from $9.3 million, or 7.3 per cent of sales, to an operating loss of $4.5 million, or 4.2 per cent of sales.

Net income took a hit, declining from $6.2 million, or $.88 per diluted share, to a loss of $6.3 million, or $0.90 per diluted share. Net inventory as of July 1, 2023, stood at $226.2 million, a slight decrease compared to June 2022.

Delta Apparel reported spending approximately $1.5 million on capital expenditures during Q3 FY23, primarily focused on Salt Life retail store buildouts and facility and information technology enhancements. This figure is down from $5.5 million in Q3 FY22.

“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. I’m extremely proud of the way our team has navigated these broad-based events and executed on strategies to counteract them, including significant reductions in inventory and debt as well as several needle-moving cost restructuring initiatives,” said chairman and chief executive officer Robert W Humphreys.

For the nine months ending July 1, 2023, Delta Apparel reported net sales of $323.9 million, down from $369.3 million in the prior year period. Operating income declined year-over-year from $29.5 million to an operating loss of $12.4 million, while net income fell from $20 million to a loss of $16.8 million.

Fibre2Fashion News Desk (DP)