In the third quarter of fiscal 2023 (Q3 FY23), net sales for Delta products, a major US-based supplier of essential fitness and lifestyle products, were $106.3 million, down from Q3 FY22’s $126.9 million. All of the company’s segments saw this reduction, with Salt Life Group segment net sales falling from $20.9 million to $17.2 million and Delta Group segment net sales falling from $106 million to $89.1 million in Q3 FY22.
Additionally, gross margins decreased from 24.2 to 13.1% from the same time last year. Gross margins after adjustments were 22.7%. According to a press release from Delta Apparel, the gross margins for the Delta Group and Salt Life Group sectors were recorded at 5.9 percent, down from 19.1 percent in the third quarter of FY22, and 50.5 percent, up marginally from 50.2 percent in the same quarter.
Selling, general, and administrative costs dropped from $22.4 million in the third quarter of the previous year to $18.5 million, according to the business. Additionally, operating profit fell year over year from $9.3 million, or 7.3% of sales, to an operating loss of $4.5 million, or 4.2% of sales.
Reduced from $6.2 million, or $.88 per diluted share, to a loss of $6.3 million, or $0.90 per diluted share, was the net income. Net inventory was $226.2 million as of July 1, 2023, a small decline from June 2022.
During the third quarter of FY23, Delta Apparel reported spending around $1.5 million on capital projects, mostly for Salt Life retail store buildouts and facilities and IT upgrades. Compared to Q3 FY22, this amount is decreased from $5.5 million.
The two major trends that have affected our business and the entire industry this year—rising cotton prices and demand destruction caused by high inventory levels in the retail supply chain—are waning, and we are transitioning into a more normalized operating environment, according to encouraging signs we saw throughout the quarter. Robert W. Humphreys, chairman, and CEO of the company, said: “I’m incredibly proud of the way our team has navigated these widespread events and carried out strategies to counter them, including significant reductions in inventory and debt as well as several needle-moving cost restructuring initiatives.
Delta Apparel reported net sales of $323.9 million for the nine months that ended July 1, 2023, down from $369.3 million in the same period the previous year. Net income dropped from $20 million to a loss of $16.8 million, while operational income dropped from $29.5 million to an operating loss of $12.4 million throughout the course of the year.
