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Junkfood sale hampers Delta Apparel Q4 and FY sales

  • Delta Apparel's sale of its Junkfood business was "largely responsible" for sales declines in both Q4 and for fiscal 2017.

  • Net income in the quarter fell 8.7% to US$2.1m, while revenue fell 20.2% to $91.3m.

  • CEO Robert Humphreys said although the retail environment is likely to remain challenging, the company believes it is off to a good start as its moves into the new fiscal year.

US activewear maker Delta Apparel said the divestiture of its Junkfood business was responsible for a revenue slip in both the fourth-quarter and full-year as retail sector and consumer demand remained weak during fiscal 2017.

Earnings for the fourth quarter ended 30 September totalled US$2.1m, compared to $2.3m in the year-ago period, while overall gross margins were down to 18.2% from 20.9%.

Net sales meanwhile, fell 20.2% to $91.3m from $114.4m last year with the company citing the divestiture of Junkfood, which generated net sales of nearly $17m in the prior year fourth quarter, principally drove the decline. It added "severe" weather disruptions, along with the general impact of retail door closings in the market, also contributed to the lower sales.

Junkfood was sold in April to JMJD Ventures for $28m with Delta saying the changing retail environment had made it "more challenging to be a niche player in the licensed-graphics space".

In the group's basics segment, sales dropped slightly to $69.6m from $73.7m last year, while in the branded segment, sales fell to $21.7m from $40.7m last year, with the Junkfood divestiture causing $17m of the decline.

For the full year, earnings were up 19% to $10.5m, while sales dropped to $385.1m from $425.2m a year earlier.

"All in all, it was a good year for Delta Apparel and we expect the major initiatives we completed to benefit us in fiscal year 2018 and beyond," said CEO Robert Humphreys. "Although the retail environment is likely to remain challenging, we believe we are off to a good start as we move into our new fiscal year."

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