The holiday season began about a month ago, but the crazy spending has just started. Ushered in by the Thanksgiving holiday, the season seems headed for new records, especially after reporting a 22 percent growth online for the five days ending with record breaking Cyber Monday purchases. When it comes to the holiday season the first thing that people think of as a gift is a new smartphone, or some sort of a smart device to add to their collection. However, the textile and apparel industry is not to be left behind as people ready themselves for the festivities with new clothing.
Delta Apparel, Inc. (NYSE: DLA) is a Greenville, SC based apparel company specializing in casual and athletic products. The company operates in two major segments, the basic products segment and branded products segment, with each contributing approximately 50 percent of the company's overall revenues. The company is in a transition process after closing some of its plants, and opening others in new markets. It reported its transition period results on October 24 for the three months ended September 28, 2013, where both segments posted declines in revenues compared to 2012.
Highlights from Q3 Results
Delta Apparel's net sales for the transition period stood at $122.6 million, a decline from last year's $130.1 million. Net earnings also declined to $0.6 million, or $0.07 per share compared to $3.6 million, or $0.41 per share reported the same period last year. The company attributed these declines to a number of factors.
"While demand was strong at the start of the period, weakness in retail sales caused a decline in the Company's basic undecorated tee business as the quarter progressed. This weakness, along with continued softness in Soffe sales, was the primary reason for the decline in revenue and lower profitability," the company said in a press release. Furthermore, the company's operating income was also affected by unusual items including costs associated with the shutdown of its Wendell screen print facility, among others.
Just to note, sales from the company's basic products segment declined by 6.4 percent, while those from the branded products segment were down 5.2 percent from the same period last year. These results may act as a deterrent to investors, but considering the fact that most of the declines were a result of various unusual items, then the company should be poised to deliver better results in the coming quarters.
The holiday season should be a boost for apparel company sales during Q4, and it remains to be seen whether or not Delta Apparel will be among those that capitalize on the shopping craze during the festivities. With its casual wear products, this sounds like a perfect opportunity to put behind Q3 results and focus on sustainable growth.
Delta Apparel faces competition from industry giants like Nike Inc. (NYSE: NKE, Macy's (NYSE: M), and Kohl's (NYSE: KOH). However, that is on the larger scale. The more direct rivals to Delta Apparel are privately held, which means it more or less faces little competition. This South Carolina company is worth a look especially after the recent transition.