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Delta Apparel (DLA) Reports Wide-Than-Expected Loss in Q1
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Delta Apparel, Inc. (DLA - Free Report) posted first-quarter fiscal 2024 results, wherein the top and bottom lines missed the Zacks Consensus Estimate. Both metrics decreased year over year. The company expressed a cautious outlook for the remainder of the fiscal year, anticipating flat demand across most of its markets relative to the previous year.
Despite the challenging start to the fiscal year, Delta Apparel remains focused on managing liquidity and working capital. The company is also evaluating options to generate efficiencies and streamline operations further, including the potential monetization of its real estate portfolio through a sale-leaseback transaction.
The company is committed to pursuing strategies that align with the best interest of its shareholders, including improving its cost structure and liquidity management amid challenging market conditions.
Shares of this Zacks Rank #3 (Hold) company have lost 11.6% in the past six months against the industry’s growth of 15.5%.
Delta Apparel, Inc. Price, Consensus and EPS Surprise
Delta Apparel posted an adjusted loss of 94 cents per share, wider than the Zacks Consensus Estimate of an adjusted loss of 93 cents and the prior-year quarter’s loss of 51 cents.
The company generated net sales of $79.9 million, down 25.5% year over year. Net sales missed the Zacks Consensus Estimate of $93 million. This decline in sales was attributed to the ongoing market dynamics that have been challenging the business, including pressures on inventory turns and excess global manufacturing capacity driving pricing pressures.
The company’s gross profit came in at $8.7 million, down 36% from the figure reported in the year-ago quarter. The gross margin for the quarter came in at 10.9% compared with 12.7% reported in the year ago quarter. The decrease was primarily due to production curtailment. However, adjusted gross margin were slightly better at 12.6% in the quarter under review.
The company registered an operating loss of $4.9 million, widening from a loss of $2.6 million in the prior year. Adjusted for strategic initiatives and production curtailment, the operating loss was $2.8 million.
Selling, general, and administrative (SG&A) expenses decreased slightly to $18.6 million from $18.9 million in the year-ago quarter. However, SG&A expenses as a percentage of sales increased to 23.3%, up 570 bps from the previous year. The increase was partly attributed to higher audit and professional service fees than the prior year.
Image Source: Zacks Investment Research
Segmental Discussion
Salt Life Group: Net sales were $10.3 million, slightly up from the prior year quarter. The segment’s gross margin came in at 45.4%, down from 57% in the prior-year period. The decrease was partly due to the timing of inventory receipts, which is expected to reverse in the fiscal second quarter.
Delta Group: Net sales were $69.6 million, marking a decrease from $97 million in the year ago quarter. The segment’s gross margin came in at 5.8%, down 220 bps from 8% in the prior-year period. The adjusted gross margin for the segment came in at 8% in the quarter under review.
Other Financial Aspects
Delta Apparel ended the quarter with cash and cash equivalents of $377,000, long-term debt of $7.3 million, and total equity of $142 million.
Capital expenditure totaled $300,000 in the fiscal first quarter compared with the $2.1 million incurred in the year-ago period.
Stocks to Consider
Here we have highlighted three better-ranked stocks, namely GIII Apparel Group (GIII - Free Report) , Urban Outfitters, Inc. (URBN - Free Report) and lululemon athletica (LULU - Free Report) .
GIII Apparel, a manufacturer, designer, and distributor of apparel and accessories, sports a Zacks Rank #1 (Strong Buy) at present. The company had an EPS surprise of 33.7% in the third quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GIII Apparel’s current fiscal-year earnings suggests growth of 39.3% from the fiscal 2022 actual. GIII has a trailing four-quarter earnings surprise of 541.8%, on average.
Urban Outfitters, which specializes in the retail and wholesale of general consumer products, carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year sales and earnings suggests growth of 7.5% and 85.7%, respectively, from the fiscal 2022 reported figure. URBN has a trailing four-quarter earnings surprise of 22%, on average.
lululemon, a yoga-inspired athletic apparel company, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for lululemon’s current fiscal-year sales and earnings suggests growth of 18.4% and 23.8%, respectively, from the fiscal 2022 reported figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.
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Delta Apparel (DLA) Reports Wide-Than-Expected Loss in Q1
Delta Apparel, Inc. (DLA - Free Report) posted first-quarter fiscal 2024 results, wherein the top and bottom lines missed the Zacks Consensus Estimate. Both metrics decreased year over year. The company expressed a cautious outlook for the remainder of the fiscal year, anticipating flat demand across most of its markets relative to the previous year.
Despite the challenging start to the fiscal year, Delta Apparel remains focused on managing liquidity and working capital. The company is also evaluating options to generate efficiencies and streamline operations further, including the potential monetization of its real estate portfolio through a sale-leaseback transaction.
The company is committed to pursuing strategies that align with the best interest of its shareholders, including improving its cost structure and liquidity management amid challenging market conditions.
Shares of this Zacks Rank #3 (Hold) company have lost 11.6% in the past six months against the industry’s growth of 15.5%.
Delta Apparel, Inc. Price, Consensus and EPS Surprise
Delta Apparel, Inc. price-consensus-eps-surprise-chart | Delta Apparel, Inc. Quote
Quarter in Detail
Delta Apparel posted an adjusted loss of 94 cents per share, wider than the Zacks Consensus Estimate of an adjusted loss of 93 cents and the prior-year quarter’s loss of 51 cents.
The company generated net sales of $79.9 million, down 25.5% year over year. Net sales missed the Zacks Consensus Estimate of $93 million. This decline in sales was attributed to the ongoing market dynamics that have been challenging the business, including pressures on inventory turns and excess global manufacturing capacity driving pricing pressures.
The company’s gross profit came in at $8.7 million, down 36% from the figure reported in the year-ago quarter. The gross margin for the quarter came in at 10.9% compared with 12.7% reported in the year ago quarter. The decrease was primarily due to production curtailment. However, adjusted gross margin were slightly better at 12.6% in the quarter under review.
The company registered an operating loss of $4.9 million, widening from a loss of $2.6 million in the prior year. Adjusted for strategic initiatives and production curtailment, the operating loss was $2.8 million.
Selling, general, and administrative (SG&A) expenses decreased slightly to $18.6 million from $18.9 million in the year-ago quarter. However, SG&A expenses as a percentage of sales increased to 23.3%, up 570 bps from the previous year. The increase was partly attributed to higher audit and professional service fees than the prior year.
Image Source: Zacks Investment Research
Segmental Discussion
Salt Life Group: Net sales were $10.3 million, slightly up from the prior year quarter. The segment’s gross margin came in at 45.4%, down from 57% in the prior-year period. The decrease was partly due to the timing of inventory receipts, which is expected to reverse in the fiscal second quarter.
Delta Group: Net sales were $69.6 million, marking a decrease from $97 million in the year ago quarter. The segment’s gross margin came in at 5.8%, down 220 bps from 8% in the prior-year period. The adjusted gross margin for the segment came in at 8% in the quarter under review.
Other Financial Aspects
Delta Apparel ended the quarter with cash and cash equivalents of $377,000, long-term debt of $7.3 million, and total equity of $142 million.
Capital expenditure totaled $300,000 in the fiscal first quarter compared with the $2.1 million incurred in the year-ago period.
Stocks to Consider
Here we have highlighted three better-ranked stocks, namely GIII Apparel Group (GIII - Free Report) , Urban Outfitters, Inc. (URBN - Free Report) and lululemon athletica (LULU - Free Report) .
GIII Apparel, a manufacturer, designer, and distributor of apparel and accessories, sports a Zacks Rank #1 (Strong Buy) at present. The company had an EPS surprise of 33.7% in the third quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GIII Apparel’s current fiscal-year earnings suggests growth of 39.3% from the fiscal 2022 actual. GIII has a trailing four-quarter earnings surprise of 541.8%, on average.
Urban Outfitters, which specializes in the retail and wholesale of general consumer products, carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year sales and earnings suggests growth of 7.5% and 85.7%, respectively, from the fiscal 2022 reported figure. URBN has a trailing four-quarter earnings surprise of 22%, on average.
lululemon, a yoga-inspired athletic apparel company, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for lululemon’s current fiscal-year sales and earnings suggests growth of 18.4% and 23.8%, respectively, from the fiscal 2022 reported figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.