Delta Apparel (DLA) Q3 Earnings Beat Estimates, Sales Miss
Delta Apparel, Inc. DLA posted third-quarter fiscal 2023 results, wherein the top line missed the Zacks Consensus Estimate while the bottom line beat the same. Both metrics decreased year over year.
Shares of this Zacks Rank #3 (Hold) company have lost 25.5% in the past three months compared with the industry’s decline of 3.2%.
Quarter in Detail
Delta Apparel posted adjusted earnings of 17 cents per share, beating the Zacks Consensus Estimate of a loss of 12 cents. However, quarterly earnings declined 80.7% year over year, mainly due to a decline in net sales and an increase in production curtailment & cotton costs.
The company generated net sales of $106.3 million, down 16.2% year over year. Net sales missed the Zacks Consensus Estimate of $116 million. The company’s performance continued to be impacted by a soft demand environment and elevated cotton costs in the quarter.
The company’s adjusted gross profit came in at $24.2 million, down 21.2% from the figure reported in the year-ago quarter. The adjusted gross margin contracted 150 basis points (bps) to 22.7%. Adjusted operating income declined 37.6% to $5.8 million, primarily due to the impact of lower net sales.
Delta Apparel, Inc. Price, Consensus and EPS Surprise
Delta Apparel, Inc. price-consensus-eps-surprise-chart | Delta Apparel, Inc. Quote
Segment Discussion
Salt Life Group: Net sales of $17.2 million decreased 17.7% year over year. The decline is attributable to the significant sales that DLA experienced in the prior year’s third quarter due to transportation delays. The segment’s gross margin came in at 50.5%, up 30 bps year-over-year.
Delta Group: Net sales of $89.1 million were down 15.9% year over year. Adjusted gross margin for the segment came in at 17.4%, down 170 bps year over year.
Other Financial Aspects
Delta Apparel ended the quarter with cash and cash equivalents of $0.3 million, long-term debt of $131.5 million and total equity of $166.7 million.
Capital expenditures totaled $1.5 million in the fiscal third quarter compared with $5.5 million incurred in the year-ago period.
Guidance
For fiscal 2024, management expects organic net sales of $410-$425 million, with an operating profit margin of 3.25%-4.25%. The company expects to generate top-line growth at the end of the second half of the fiscal year.
Stocks to Consider
Here we have highlighted three better-ranked stocks, namely GIII Apparel Group GIII, Urban Outfitters, Inc. URBN and lululemon athletica LULU.
GIII Apparel, a manufacturer, designer and distributor of apparel and accessories, sports a Zacks Rank #1 (Strong Buy) at present. The company had a significant EPS surprise in the first quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales and earnings suggests growth of 1.9% and 0.4%, respectively, from the year-ago period’s actuals. GIII has a trailing four-quarter earnings surprise of 47.4%, on average.
Urban Outfitters, which specializes in the retail and wholesale of general consumer products, carries a Zacks Rank #2 (Buy) at present. The company’s expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current financial-year sales and earnings suggests growth of 5.3% and 60%, respectively, from the year-ago period’s reported figure. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
lululemon, a yoga-inspired athletic apparel company, currently carries a Zacks Rank #2. The company has an expected EPS growth rate of 20% for the next three to five years.
The Zacks Consensus Estimate for lululemon’s current financial-year sales and earnings suggests growth of 17.1% and 18.4%, respectively, from the year-ago period’s reported figures. LULU has a trailing four-quarter earnings surprise of 9.9%, on average.
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Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
G-III Apparel Group, LTD. (GIII) : Free Stock Analysis Report
Delta Apparel, Inc. (DLA) : Free Stock Analysis Report
