Delta Apparel Consolidates Manufacturing Production
Lowers Product Costs on Basic Tees
GREENVILLE, S.C.--(BUSINESS WIRE)-- Delta Apparel, Inc. (NYSE MKT: DLA) today announced plans to consolidate fabric production for basic, blank tee shirts to its Ceiba Textiles facility in Honduras.
The consolidation transfers the production of some fabric for basic tees currently manufactured at the Company's Maiden, North Carolina plant to Honduras, increasing production at the Ceiba Textiles facility by approximately eight percent to roughly 900,000 pounds of fabric per week. This change shifts fabric production for blank tees to the Company's most cost-effective facilities and is expected to shorten the production cycle by approximately ten days. In addition, the Company is further reducing U.S. fabric production in order to better align inventory levels with sales expectations. Total fabric production at the Maiden facility will decrease by approximately thirty-five percent.
Bob Humphreys, Chairman and Chief Executive Officer, commented, “These decisions are always difficult, especially when they affect associates who have been dedicated and loyal to our Company for many years. However, the Company can no longer justify the additional cost associated with its current level of domestic fabric production for the highly competitive blank tee shirt business. We believe this economic decision is in the best long-term interest of Delta Apparel and our shareholders.”
The movement of production to the Ceiba Textiles facility will begin immediately and is scheduled to be completed by the end of June 2014. The Company expects to realize annual savings of approximately $1.1 million once the consolidation is complete. The anticipated aggregate costs associated with this transition are approximately $0.2 million, which is expected to be expensed in the Company’s fiscal year 2014 third quarter.
The consolidation will impact the employment of 70 associates at the Maiden facility. This facility will continue to employ approximately 190 associates producing fabric to support the Company’s USA-made marketed goods and private-label products, as well as the Company’s Mexico sewing operations.
Mr. Humphreys continued, “Delta Apparel is in an excellent position for growth as economic conditions improve and consumer buying power is renewed. In the meantime, the Company is managing costs closely and finding ways to operate more efficiently. We continue to evaluate and improve our manufacturing platform to allow us to introduce new products that consumers want with the efficiency, service and price points that our customers expect.”
About Delta Apparel, Inc.
Delta Apparel, Inc., along with its operating subsidiaries, M.J. Soffe, LLC, Junkfood Clothing Company, To The Game, LLC and Art Gun, LLC, is an international design, marketing, manufacturing, and sourcing company that features a diverse portfolio of lifestyle basic and branded activewear apparel and headwear. The Company specializes in selling casual and athletic products across distribution tiers, including specialty stores, boutiques, department stores, mid-tier and mass chains, college bookstores and the U.S. military. The Company’s products are made available direct-to-consumer on its websites at www.soffe.com, www.junkfoodclothing.com, www.saltlife.com and www.deltaapparel.com. The Company's operations are located throughout the United States, Honduras, El Salvador, and Mexico, and it employs approximately 6,900 people worldwide. Additional information about the Company is available at www.deltaapparelinc.com.
Cautionary Note Regarding Forward Looking Statements
Statements and other information in this press release that are not reported financial results or other historical information are forward-looking statements subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. These are based on our expectations and are necessarily dependent upon assumptions, estimates and data that we believe are reasonable and accurate but may be incorrect, incomplete or imprecise. Forward-looking statements are also subject to a number of business risks and uncertainties, any of which could cause actual results to differ materially from those set forth in or implied by the forward-looking statements. The risks and uncertainties include, among others, the volatility and uncertainty of cotton and other raw material prices; the general U.S. and international economic conditions; deterioration in the financial condition of our customers and suppliers and changes in the operations and strategies of our customers and suppliers; the competitive conditions in the apparel and textile industries; our ability to predict or react to changing consumer preferences or trends; pricing pressures and the implementation of cost reduction strategies; changes in the economic, political and social stability of our offshore locations; our ability to retain key management; the effect of unseasonable weather conditions on purchases of our products; significant changes in our effective tax rate; restrictions on our ability to borrow capital or service our indebtedness; interest rate fluctuations increasing our obligations under our variable rate indebtedness; the ability to raise additional capital; the ability to grow, achieve synergies and realize the expected profitability of recent acquisitions; the volatility and uncertainty of energy and fuel prices; material disruptions in our information systems related to our business operations; data security or privacy breaches; significant interruptions within our distribution network; changes in or our ability to comply with safety, health and environmental regulations; significant litigation in either domestic or international jurisdictions; the ability to protect our trademarks and other intellectual property; the ability to obtain and renew our significant license agreements; the impairment of acquired intangible assets; changes in e-commerce laws and regulations; changes to international trade regulations; changes in employment laws or regulations or our relationship with our employees; cost increases and reduction in future profitability due to recent healthcare legislation; foreign currency exchange rate fluctuations; violations of manufacturing or employee safety standards, labor laws, or unethical business practices by our suppliers and independent contractors; the illiquidity of our shares; price volatility in our shares and the general volatility of the stock market; and the costs required to comply with the regulatory landscape regarding public company governance and disclosure; and other risks described from time to time in our reports filed with the Securities and Exchange Commission. Accordingly, any forward-looking statements do not purport to be predictions of future events or circumstances and may not be realized. Further, any forward-looking statements are made only as of the date of this press release and we do not undertake publicly to update or revise the forward-looking statements even if it becomes clear that any projected results will not be realized.
Delta Apparel, Inc.
Deborah Merrill, Chief Financial Officer
Investor Relations Contact:
Sally Wallick, CFA
Source: Delta Apparel, Inc.
Released June 4, 2014