Update: Delta Apparel's Q2 Earnings - Falling Sales And Margins Amid Unprecedented Fall Of Cotton Prices
- Sales fell 7% while income fell 44% Y/Y on slumping cotton prices that fell abruptly by ~30% in a matter of weeks.
- I reiterate my long thesis but the downside should be protected as cotton prices may keep falling. However, company restructuring should yield better margins and higher stock price.
- The long thesis has worked well for 7 months, gaining ~10%. But then DLA’s stock started underperforming, helped by falling cotton prices and a small-cap sell-off.