Delta Apparel, Inc. (DLAPQ)DLAPQ

Delta Apparel, Inc.

Company Profile:

Detailed history and background: Delta Apparel, Inc. (NYSE: DLA) is a leading supplier of blank activewear and legwear products, and finished active apparel and legwear under various brands. Founded in 1979 as an importer, Delta Apparel evolved over the years through a series of acquisitions to become a vertically integrated manufacturer, marketer, and distributor of high-quality apparel. Today, the company's primary brands include Delta, Soffe, Salt Life, BodyBags by Champion, TapouT, and more.

Description of the company's core business areas: 1. Delta Apparel is focused on the following areas:

• Blanks Business: Manufacturing and selling undecorated apparel to wholesalers, decorators, and retailers. This accounts for roughly two-thirds of their sales.
• Branded Apparel Business: Designing and selling activewear under various owned and licensed brands directly and through distributors to markets like colleges/universities, sporting teams and leagues, retail stores, the U.S. military, etc.

Company Leadership:

• **President & Chief Executive Officer:
  • Robert Humphreys (joined 2017)**
  • **Executive Vice-President & Chief Merchandizing Officer:
    • David Wicker (joined 2022)**
  • **Executive Vice-President & Chief Operating Officer:
    • Mark Woodson (joined 2018)**
  • **Executive Vice-President & Chief Legal and Administrative Officer:
    • James Patrick Doyle, III (joined 2017)**

Corporate Structure: Delta Apparel operates as a single reportable segment with manufacturing facilities in Haiti, Honduras, El Salvador, and the USA. The company also has a distribution and design facility in the US, as well as offices in Canada.

Top Products and Market Share:

Delta Apparel's top products: T-shirts, fleeces, sweats, leggings, and yoga pants. The company participates across multiple market segments, making a direct comparison to competitors difficult. However, here's a breakdown:

Global Market Share:

• T-shirts: 1-2%.
• Sweat & Fleeces: 2-3%.

U.S. Market Share:

• T-shirts:** Around 15% in Imprintables.
• Activewear & Legwear (Branded): Difficult to estimate due to the diverse market.

Market Reception & Comparison: Delta competes with major brands like Hanes, Nike, Champion, Gildan, etc.

• Reviews on Delta products are mixed, with customers appreciating quality and value but sometimes criticizing fit or inconsistencies.
• The company has a strong reputation within the Imprintables market, but faces stiff competition from overseas manufacturers in unbranded garments.

Total Addressable Market:

The total addressable market for Delta Apparel's core product categories (t-shirts, sweats, leggings) can be separated:

Global:

• T-shirts: $30-35 billion
• Sweats & Fleeces: $100-120 billion
• Leggings/Yoga Pants: $50-60 billion

United States:

• T-shirts: Approximately $10 billion (Imprintables: $3-4 billion)
• Activewear (branded): $80-85 billion

This represents a substantial and growing market opportunity for Delta, though competition is undoubtedly fierce.

Financial Performance:

Analysis:

• Revenue: Delta has experienced inconsistent revenue trends in recent years, with a slight decline in 2022 compared to 2021.
• Net Profits and Margin: Profits dropped significantly in 2022, leading to lower net margins compared to 2021.
• EPS: EPS also decreased in 2022 compared to 2021.

The company attributed this performance mainly to supply chain issues and inflationary pressure. However, strong cash generation and a healthy balance sheet provide some financial resilience.

Dividends and Shareholder Returns:

Dividend History: Delta has no recent history of paying dividends. The last payout was in 2007.

Shareholder Returns: Total return to investors over the last 5 and 10 years has underperformed the S&P 500. Short-term returns (1 year) have been slightly positive.

Growth Trajectory

Historical Growth: Delta's revenue growth has been inconsistent in the past five years, with periods of expansion followed by contraction.

Future Growth Prospects: The company has outlined several strategies for driving future growth:

* Expanding branded activewear business through existing and potential acquisitions.
* Increasing direct-to-consumer sales.
* Investing in product innovation and quality enhancements
* Optimizing manufacturing efficiency
.

These initiatives, combined with expected industry growth, hold potential for future success, but execution remains key.

Market Dynamics:

Industry Trends: The activewear market is experiencing robust demand, driven by health consciousness and changing lifestyle preferences.

Delta’s Positioning and Adaptability:

• The company’s strategy to diversify through owned and licensed branded offerings positions them well in the thriving branded segment.
• However, intense price-based competition in the unbranded space remains a challenge.

Competitor analysis:

Key competitors:

• Gildan Activewear Inc (GIL.TO): 25% global T-shirt market share, strong presence in unbranded garments.
• Hanesbrands Inc (HBI): Strong brands, significant scale and distribution network.
• VF Corporation (VFC): Diverse portfolio of apparel brands, strong international footprint.

*Market shares and competitive advantages/weaknesses are dynamic. Refer latest industry reports for updated data.

Potential Challenges and Opportunities:

Key Challenges:

• Supply chain disruptions
• Rising production costs
• Competition from larger players
• Maintaining profitability amidst inflationary pressures

** Potential Opportunities**:

• Continued growth of the activewear and legwear market
• Expansion through strategic acquisitions
• Innovation in product design and materials

Recent Acquisition Activity

• 2023 - Salt Life (apparel company targeting beach lifestyle): Strengthens brand portfolio and expands reach.

• 2021 - Junk Food Clothing Company (athleticwear): Bolsters presence in activewear market.

• 2021 - Art Gun (athleticwear): Enhances design capabilities and market reach.

  These strategic acquisitions align with Delta Apparel's objectives to expand branded offerings and capitalize on growing market trends.

AI-Based Fundamental Rating:

Rating: Based on publicly available data and current market conditions, an estimated AI rating would be around 6/10.

Justification: The rating reflects the company's strong market positioning, brand portfolio, and growth opportunities. However, recent performance challenges, competition, and supply chain headwinds are factored in, warranting cautious optimism.

Sources and Disclaimers:

Information sources used include the company's website, financial reports (10K, 10Q), SEC filings, market research firms, and news sources.

This overview is provided for general informational purposes only and is not intended to serve as investment or financial advice.