Delta Apparel Reports FY12 Second Quarter and First Half Results
Delta Apparel Inc., the Greenville, S.C. apparel supplier, recently reported that while revenue continued to grow in its fiscal 2012 second quarter and first half, earnings were negatively impacted by a one-time second quarter inventory markdown of $16.2 million.
The inventory markdown, previously announced, was necessitated by the unprecedented record high cotton costs combined with selling price discounts in the company's line of basic undecorated T-shirts. As a result of the markdown, the company's results for the remainder of fiscal 2012 in this business should be free from the effects of these high cotton prices flowing through cost of sales.
Sales for the second quarter ended December 31, 2011 totaled $105.5 million, up from the $104.7 million reported in the prior year's second quarter. The company had a net loss in the fiscal 2012 second quarter of $13.6 million, or $1.61 per share, compared with net income of $1.4 million, or $0.16 per diluted share, in the fiscal 2011 second quarter. The net loss was due primarily to the inventory markdown in the basics segment and lower than anticipated demand from retailers stemming from price increases on branded products necessitated by higher cotton costs.
For the first six months of fiscal 2012, sales increased approximately 8 percent to $229.0 million versus $212.6 million for the first six months of fiscal 2011. The company had a net loss in the fiscal 2012 six month period of $9.2 million, or $1.09 per share, stemming from the second quarter loss partially offset by the record earnings that the company reported in its 2012 first quarter. This compares to net income of $3.1 million, or $0.35 per diluted share, in the prior year six month period.
Robert W. Humphreys, chairman and ehief executive officer of Delta Apparel, commented that the company is positioned for growth in the last half of fiscal 2012 due to the tough decisions that were made in the second quarter. He said, "Had we not taken the entire markdown in the second quarter, the company would have had to deal with the impact of high cotton prices throughout the remainder of the year. We now can focus on growing our operations with the effect of this unprecedented increase in cotton prices behind us. In the second half of fiscal 2012, we currently expect revenue and earnings growth over the prior year. This should allow us to end fiscal 2012 on a positive note and position us to resume annual sales and earnings growth in fiscal 2013."