Delta Apparel(US:DLA)2023-12-08 01:22Financial Data and Key Metrics Changes - For the fiscal year 2023, total sales were $415.4 million, a decrease of 14% from $484.9 million in the prior year [4][30] - Gross margins for the fourth quarter were 11.2%, down from 18.7% in the prior year, primarily due to production curtailments and inflationary cotton costs [28][67] - Net income for the quarter was a loss of $16.4 million or $2.34 per share, compared to a loss of $281,000 or $0.04 per share in the prior year [29][70] Business Line Data and Key Metrics Changes - The Salt Life Group segment net sales were $59 million, slightly down from $60 million in the prior year [30] - Delta Group segment net sales were $356.3 million, down from $424.8 million in the prior year [30] - Salt Life's same-store sales for the fourth quarter were flat year-over-year, with a 4% decrease for the full year due to choppy retail traffic [21][46] Market Data and Key Metrics Changes - The activewear market showed signs of stabilization, but overall business was impacted by high inventory levels and a higher interest rate environment [37][40] - E-commerce sales for Salt Life grew 41% year-over-year for the quarter and 54% for the year, indicating strong performance in direct-to-consumer channels [46] Company Strategy and Development Direction - The company is focused on reducing working capital, controlling costs, and maintaining high service levels to drive long-term growth [9][58] - Strategic initiatives include transitioning operations to more efficient facilities and optimizing the cost structure to generate higher returns [11][35] - The company plans to continue investing in product development and decoration platforms to drive higher margin sales growth [19][24] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment remains challenging due to high cotton prices and reduced demand, but they expect conditions to improve in fiscal 2024 [4][10] - The company anticipates net sales in the range of $400 million to $415 million for fiscal 2024, with operating profit margins between approximately 2% and 3.5% [58] Other Important Information - The company is conducting a strategic review of its Salt Life business following an unsolicited purchase offer [6] - The company expects to realize approximately $31.5 million from sale-leaseback transactions of several properties [15] Q&A Session Summary Question: What is the level of demand going forward? - Management indicated that demand remains choppy, with some areas like ad specialty and e-retailer businesses performing well, while others are slower [74] Question: When do gross margins normalize? - Management expects to see benefits from lower cotton costs starting in the second quarter of fiscal 2024 [78] Question: What is the outlook for new store openings for Salt Life? - One new store is expected to open in Virginia, with no other leases signed at this time [84]