Delta Apparel (DLAPQ) 18 Nov 222022 Q4 Earnings call transcript

Thank you and good afternoon to everyone participating in Delta Apparel’s Fiscal 2022 Fourth Quarter and Full Year Earnings Conference Call.

Joining us from management are Bob Humphreys, Chairman and Chief Executive Officer; and Simone Walsh, Chief Financial Officer.

Before we begin, I’d like to remind everyone that during the course of this conference call, projections or other forward-looking statements may be made by Delta Apparel’s executives. Such projections and statements suggest prediction and involve risks and uncertainty and actual results may differ materially. Please refer to the periodic reports filed with the Securities and Exchange Commission, including the company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. factors those cause or contained important differ results forward-looking identify from materially in documents that actual could to statements. These the projections as even as will that today, to company projected update note any results any statements not becomes commit made Please forward-looking apparent revise statements any forward-looking does not realized. and it by required only except or law, if the be are of that turn now to call the will I Mr. over Humphreys.

Apparel. for your interest Good afternoon and Delta thank you in

with in performance pleased XXXX. year extremely are We our fiscal

As in full X.X%, per saw operating million our you earnings afternoon, Press of we year and Release delivered resulting margin $XXX.X of share. this in $X.XX sales of diluted an

demand Within products as environment evolve as lines. post-pandemic of double economic for of our and segment, change price to XX% units ability of the ability of higher throughout people. results in between shifted and to sold of our go-to-market our Retail digit was in overall I’m year and navigate and strategies, diversified the strong solid our the Our bottom year both fiscal progressed. business year, and channels, product year-over-year proud throughout increases our moderating resiliency Global sales quickly and product in consumer to by on Direct, across testament continued sales channels yet All Direct, Group remain goals incredibly most conditions a Salt as to shareholders the our five is initiatives. Brands, line growth our focused primary the early organization’s market Delta dynamic execution DTGXGo growth of the environment delivered reach with course various adapt growth as well entire Life XXXX. strategic driven our to for the achieve economy demand year its and categories, Delta The U.S. market the

Brands production in near our vertical Brand in U.S. Direct strong U.S. our our shore also specialty market, Delta channel, see generate and adjacent the made channels. print proximity the immediately and in sourcing and the and inflationary priorities, print pass is not as U.S. Group well segment. distribution pressures Direct relations, Retail coupled risk channels, platform our fulfillment our input Moreover, with through demand growth platform screen itself rising retailer These and sustainability value screen evolving interest only sales and production as but across prices in our disruptions. chain other in from with adding dynamics, ancillary and and manifested of in new costs cost. selling investment heavily strong flexibility solid our inflationary services, integrated our to favorable our were higher levels quickly higher supply Delta on move manage but by we industry, Global market our and domestic ad and able like capitalize of manufacturing DTGXGo associated to to management social, impacted the to fiscal increased in and and platform rest mitigate speed, regional We continue our year, network we’ve the demand accelerating due environmental and to the U.S. businesses. vertically continue We of our were market to to inventory investments better to pressures offers trade strategies input recalibrate throughout strategic

through operate inventory of as to our facilities first $X.XX production to levels reducing second in navigating and some inventory inventory. declines almost our fiscal and We into fiscal for inputs until third per replenishment finished partners stay our is in great below full XXXX. the fiscal price of at inflationary our margins fluid of increased accepted in of purchase in expect level the by prices by our retail retail expect our impact brought of capacity environment our of and our output challenges goods saw The believe hampered XXXX. fluctuations five seen a the month volatility in inventories put beyond job we pound caused pricing. manufacturing to key consumer the We’ve cotton XXXX. off futures a quarter, has the gross of and the but become Our retail, holiday it increase responding our inventory level economic fiscal cotton, period XX% in started reducing escalated orders their similar in going that we partners we’ll we The quarter. year encounter this material season We raw on from sold. be saw environment mass half team high value half Activewear a demand market we one and to in inflationary did aligned the for as in our We would progress close overall forward the demand. the reached margin basic continue to These half demand support pressure as currently and prepared of overall first costs on began partners, we input XXXX to managing T’s fourth in a demand the continue course commitments when of to to better with the of uncertainty be challenges over

six Our garment units first print traditional latest coupled and year-over-year DTGXGo its to to digital-first also our We ability business more and leadership supply as achieving eight ended its of blank on locations. the the garments see with demand. clear solidify is the versus when digital to model, unique benefits of heavy, Delta the technology now More strategy, customers continues and fulfillment strategy vertically make-on-demand blank sales our both year support DTGXGo’s make-on-demand which in digital model and make-to-forecast distribution printing in through position revenue. centers particularly grow fiscal increases four sold digital operate digital in locations, and with inventory

but only with costs, another garment not supply party associated adding supply chain. our also to customer’s blank layer third risk their seamless Our reduces

and For costs, non-value working eliminates efficient needs. us, more lowers capital operation a this model added creates

additional cost and margins, While equipment from see as forward our in prices to challenges new through delays print growth as XXXX, fiscal continue year the worked market we brought DTGXGo U.S. tight online which sales and we production going depressed and both and we at experienced labor some potential margin selling grow.

from extending staffing fiscal Life year this We also with We gains, prior growth year. in saw through see XXXX and increased demand company. expect growth success with over schedules meet to to productivity for in brand, output channel our high Salt great additional lifestyle our operating the XX%

for pleased demand brand across the all with the omni-channel Salt continued strategy. our Life legs three are of We go-to-market

drivers to accretive milestone Life the revenue. eight XX Salt doors new Our ended retail reached branded the retail line of doors spread doors, continue We year. and tool year and branded coast as opened a brand awareness during with valuable along U.S. a of the serve

through fourth to of quarter. Salt supply chain the Life’s more excited by work e-commerce important Our even Salt Long organic them in additional another owned new to half market Life Rehoboth Salt Beach, stores was drive in Life and location able challenged fiscal to visibility growth New first the eight year, we Delaware in shortages XXXX, operated in to give to is the during in business store open the Jersey and an this expectations, Branch, was but in six Northeast. are segment exceeding including

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views engagement increased the X.X a compared Our and broader consumer brand’s million drive target These segment appeal Life profile shows The two fiscal Salt audience, reached to success elevate other and XXXX, Life we appeal driven increase were YouTube producing fiscal to efforts in YouTube videos three Salt paying XX% off. to of a largely short designed week. by also are to to to per XXXX, the Shorts. channel

grew in Facebook, Beyond YouTube, Pinterest. fiscal channel, nearly spanning audience Life’s Salt LinkedIn XXXX, and XX% net Twitter, Instagram, social

articles, portal, travel includes reviews Daily We other Salt, member the to Life’s with articles and also industry, Salt to how customers in published team our continue content the gear online articles, which best featuring the of interact content. through

surfer was year Overall, we Kieran Life Salt continue for Life our in our to by year and excellent podcast, Delta segments member, produce for Salt both company. and our XXXX team Anderson. Group Below, of robust organic professional and hosted the Group Additionally, growth fiscal another Salt Above Life overall

a integrated flexibility connection emotional and our we a our built digital has strong efficiencies vertically year full business mover lifestyle foundation Salt have Life of across printing distinct and five our widespread services segments demand broad We in of brand advantages of The range operations offer, and our unique range and our highlight, and the products and fulfillment that consumers. strategies. the with for first the go-to-market performance

financial business the for on Simone to over and call the join results. Then review turn back I’ll fourth call year Simone. who now and quarter open full we our me Let Walsh, will highlights questions. when

Thank you, Bob.

both Group For X.X% Life in We business. year-over-year, Group Group, over fiscal and strong another fiscal XX% line entering strong the positive and growth are of our momentum of Group year the Salt we our with was many Delta growth XX% and year. Life growth delivered XXXX XXXX Delta areas across Salt prior top in including over the

three all and our sales sales growth. Activewear, experienced Group, Brands, channels Direct, Delta Delta year-over-year the key Global Direct Retail Within in

at back result fiscal While we retailers, selling large to second Delta scale year-over-year are Direct and with both on higher Direct and half ability Direct Activewear of sales sales was achieve maintain increased and challenged growth double-digit in orders, our the from a in particularly channel sales that the channels channel, Retail XXXX, mass as pleased growth to Brand units prices. in of

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and the With we’re fiscal the in extremely Salt direct-to-consumer channels, XXXX potential Life excited Life’s we about experiencing of remain in growth Salt brand beyond. strength our and

cotton the is our of significantly by operation. manufacturing used price influenced Our in business

During volatility negatively and the elevated the price fiscal business. gross year, margins our the impacted in

the costs. in cotton we half depressed half be other to both, of the produced continue the impacted XXXX, to in first margins which our through was and sell we XXXX, elevated priced input fiscal higher inventory fiscal the expect We as by latter of

Although in quarter reduction unabsorbed we action million gross use took fixed higher-priced of we do expense, basis The costs approximately by measures. from fourth which margins to production, points reducing these unabsorbed expense additional our less for XX impacted the cotton the of by resulted $X.X quarter.

additional from cotton aligned and anticipate quarter fiscal to year in $X return expansion in production In declining inventories unabsorbed the in with of our of to operate to in of approximately we volatility price margin quarters and below third better will the Currently, until overall take XXXX peak are quarter, of XXXX. million year’s with recently we result and fiscal second expected targeted additional These first and addition, demand. facilities price continue to expense of fourth stabilizing adjustments respectively. some last are $XXX,XXX full the the we capacity shutdowns and expect

from rising year. the note due as of we in Additionally, escalating labor of input has is increased inventory that a the the coupled an price costs on-hand and with This units’ increase a of result our inventory result increase prior pressures, inflationary to on-hand.

inventory Delta manufacturing demand monitor as vast to We blank consists align necessary and our of expect our make we majority are channels that with and sell levels closely market adjustments fully to inventory The basic will our output arises. continue conditions. various to monitoring garment through of as

full year Now more and through I’ll results. of quarter go detailed a review financial fourth our

Delta fourth quarter year Life the $XXX.X sales compared Group were XX% prior X% over with up sales fourth Salt decreasing nearly net prior $XXX.X year sales quarter. million the the For million quarter, fourth and in Group to

quarter, prior cost elevated the margins quarter costs e-commerce. were from revenue flowing The the fourth prior Delta million were fourth year grew quarter, cotton, softness XX% and Group offset to and the to businesses, Salt $XXX.X decline fourth in $XXX.X as channel. declined chemicals, well million Global Group of quarter point Delta Life Brands During in mostly by including was our prior the driven Activewear net unbudgeted our to the The by fourth year the in higher growth Direct sales, sales improvement both quarter. offset to compared to of XX.X%. Retail helped the Group decline by dyes quarter. margins a negatively energy, three growth XXXX. inventory growth of by higher across as in for its retail and $XX were Group, the million compared channels; labor impacted to for XX.X% organic freight Salt $XX.X an in driven wholesale, basis fourth In fourth overall XX.X% of market margins in segment’s all million the compared quarter was XX.X% The quarter cost Gross Gross XXX the costs. curtailments, production segment. DTGXGo fourth and gross through margins Life input

we As basic reducing resulted costs in $X.X of started in our quarter. the quarter, Bob tees mentioned, of unabsorbed expensed production which in fourth million September fixed

to compared increasing administrative our gross gross XXX labor Selling, including a quarter XX.X% distribution $XX.X get increased in expenses, quarter, better the Life points in business Our alignment to the by across retail will increase fourth Salt was in higher of in basis a sales. The Salt XXXX to quarter, mix of fixed operations. segment’s in retail sales, sales production fourth general branded our This until through from costs impacting fiscal of the reduce fiscal million to additional increased the store of primarily percentage prior XX% all driven were of XX.X% stores favorable our in SG&A Life margin. XXXX first unabsorbed and and sets. Salt Life further costs year the inventories of resulting half result Group margins improved plan coming

in up X.X% As the a from $X.X declining $XX.X result, operating associated primarily the September substantially per fourth prior was income in $X.X million or fiscal compared higher million. Overall, XXXX million expense were of change $X.XX million. we of expense the incurred income is quarter a sales, $X.X negative net or million Other of $X.X in quarter other fourth made a fourth quarter. year million loss $X.X year acquisition for the year. contingent primarily valuation million, quarter was of DTGXGo. fourth of of liability consideration or contingent up liabilities the prior prior share driven as share DTGXGo quarter valuation diluted prior consideration per the income to $X.X This of profits in Interest the $X.X fiscal $X.X or XXXX debt million with for changes In of in X.X% due sales quarter, the XXXX, $X.XX by fiscal diluted the of of our was of million, from to net million $X.X levels.

results. fiscal our full to year turning Now,

fiscal and XXXX XX% million over XX% year. Salt growth net approximately Group in to Group almost in with prior the full $XXX.X year, Life XX% the Delta the For growth the sales increased

million million, from For fiscal sales the prior net the Delta XXXX Group, $XXX.X in for up were year. $XXX

Salt sales, basis were Delta gross in points by improvement offset points million driven XX comparable million, from the of the XX.X% to an basis prior profit net points partially with year, For segment of margins Salt by of Group the XXX million Group. $XXX.X XXX net basis Life sales to $XX.X X.X% in a was $XX.X in decrease that $XX.X Life, million, increased sales contracting period. the of Gross up

driven a million input year, in resulted operating million grew offset million $X.X contingent XX.X% prior X.X% compared the related well X.X% method input and Equity in $X.X a In the or in $X.X of channel the the on year, million two well decline consideration curtailments. a XXXX quarter. $X.X profit year prior of Delta expense our prices. prior decline $X.X as expenses slightly liability, reduction investment, or driven production profit from of margin. of net profits operating the Honduran the in from our by million in $X.X costs, the the labor fiscal primarily Interest fixed included $X.X sales million to method manufacturing increased to was In partially $XX.X million, million $X.X In December our margins Life expenses million XXXX, XX included as disposable year the in Group, income with margin. million contingent expense of net operating prior higher the income debt in related from in the points XXXX $XX.X prior Equity income million. gross as of Honduran a sales, margins were $X.X gross well higher to million SG&A related year, increased in selling that and the XX.X% offset costs mix XX.X% up loss with due was segment, liability, million year, XX.X% to as interest the Within Salt by disrupted increasing of were other from sales XX.X% income coupled in reduction to $XX.X hurricanes expenses of profits by operating consideration from Overall, in or prior basis year. investment, as Honduran the assets fiscal as of $X.X by levels. the of Other prior SG&A in year facilities

tax from of XXXX rate tax the effective fiscal down XX.X%. for was XX.X%, Our effective prior rate year

U.S. share per at capitalized to increase totaled net diluted credit transportation year-end. generally compared $XX.X materials, fiscal of a our and our and inventory labor in $X.XX cash-on-hand, As or Cash-on-hand under inventory share. Total million. $XX.X X.X to debt, in Net for low an translated these and compared including year-end financing $XXX.X availability expansion higher million $X.XX shares, when ago under market was the the just million input $XXX.X XXXX diluted $XXX.X million impacting income million was The units’ income result, million at year revolving $XX.X prior On and costs net was million. facility year-over-year position. year per a a to reflects was both inventory earnings on-hand.

work balance demand continue manage the appropriately to across output Delta and with Group We our on-hand inventory. to manufacturing

This focused and approximately openings technology store the mainly capital fiscal expenditures. was support digital During we capital information business, in our to print $XX retail DTGXGo spending invested year million initiatives. equipment on

projects our Group In fiscal on have completed We Salt location retail further XXXX, improving efficiency. planned manufacturing manufacturing expansion in invest Delta our and for to plan also. focus we continue Life’s to openings

to under end continue In the remaining of digital announced the over total its program. capacity the amount bringing purchased repurchase million fiscal $XX.X shares life At invest existing the share also capacity. in of million of repurchased to for fiscal $X.X repurchase authorization. will We print the program, $X the company additional XXXX, XXX,XXX board the company had previously under million XXXX,

XXXX, in in primarily rebalancing sales half growth due for should Brand to be see by the of large first the to year, orders to Retail replenishment Delta slower forward and a moderated we our our continued from Direct expect Activewear Global retailers. which channels, mass of channel Looking Direct in

market channel, the anticipate back half demand work prior to comparable to to continue in as the strengthens. way of through expect inventories achieve growth sales As year, in and the of the mass we XXXX, business year the half first their Activewear the

direct-to-consumer growth expect another into overall season, in Life, growth year year-over-year we sales fiscal head we of our Salt all-important holiday the expect see continue, XXXX. DTGXGo. sales in At anticipate to channel we year and As growth to double-digit for the of strong another

turn from of XXXX, XXXX. fiscal consistent peak As QX the return We for cotton greater price and expect first and in the cost I in year. the are quarter some look progresses. leverage the will remain our the to XXXX, final referenced margin SG&A currently fiscal earlier, of in forward to have to we expectations over you price with and second of now back recently volatility expansion commensurate we a remarks. fiscal stabilizing year as declining half call updating half with Bob anticipate drivers fourth the to the the year SG&A expected to sales in of

Thanks, Simone.

XXXX aspects large. momentum business, year industry and fiscal positive of across into also moving apparel many the with but uncertainty at across are with economy the We our

platform capital continue demand expect our meet gives leverage to similarly levels and to the will our production We to the adjust working flexibility to us progresses. year manage manufacturing as and capital vertical expenditures

ambiguity be opportunities of up We’ll our interest advantage in as they stakeholders. economic take We be the of we’ll have of and all past, successfully well market channels best to arise. questions. range position glad customer for distribution points operated our diversified ready believe to and now, may wide touch us And through quickly, and move in should decisively to call periods of of the the any open that

Telsey first the proceed [Operator from Instructions] with Please your Advisory. Our line of Dana question comes with Telsey question.

Hi! Good Simone. afternoon and Bob

you think get and from do Thank previous tailwinds think and you what impacted, trajectory following or you our it’s be the and and going level trajectory can frankly do other back going [Audio tailwinds bucket costs about or fourth towards freight be? the the the I whether could SG&A what gross – margins ’XX from our potentially to margin quarter, material As headwinds into costs cost. you. mean, to the market we Gap] could the year, headwinds,

getting slowly? about weren’t word repeating there. mind you every we Would Dana, other that

Sure.

you. and what you the headwinds? to attain on year, next look And wondering are margin what the if past would we be the meet were? trajectory, as your Just or year’s margins tailwinds What exceed that? the be forward go would the opportunities year, hindrances previous and to Thank you operating through fiscal able

service we for the cost-of-sales are be cotton tailwinds are business think going our higher know and many think raw can and levels priced our higher go that also ‘XX, on to particularly provide centers, through in costs T-shirts T-shirt. distribution demand cost I demand on that DTGXGo’s our flowing our strong labor decorated for And particularly through materials the blank and fiscal and headwinds I input and parts will be we consumer you of as So, domestic other operations.

course unit So fiscal you strongly, to ‘XX to first this growth know out I would and of grow an saw average growth our in for revenue price all-time in last be into and Salt strong and selling our a to DTGXGo record quarter Life a DTGXGo in business both we the of our year. of quarter business and expect business, door this that year is continuing expect continue

both will that So those as be for tailwinds we year you expense do in I think profitability production two and as our time know think another things taking of facilities, we our the headwind company go. come. in we and revenue down We our to years and manufacturing are this

fourth fixed then that did our quarter, that our more more and a cost and then and we mentioned, in running more So second as we likelihood leveraging quarter in absorbing get we’ll cost. and fixed do back just to the and the in facilities quarter third manufacturing full

you to main think those. I the drivers there? those want Simone, are else got of anyway, add So you anything

just surcharges I’ll add away, that then, terms overall, are fuel those of think in chain so the have supply gone is seeing helpful. we I

if those have also into elevated still the freight Central at that think America, Encouragingly, though in so look northbound U.S. of costs the freight we I southbound there supply helpful. Asia from are is freight, out that come down, costs have chain. and you

SG&A referenced as You well.

opening stores. driver the our biggest year, I over expense think course will is SG&A dollar the of in that of retail cost you see the

and all store the costs SG&A. expenses opened and operating in So year, those during stores costs, are eight we lease

see you’ll So also. that

you. Thank

Investor. the Our with from next Please question. question of comes Peter Johnson, proceed a your line Private

on Yes, good bit Fanatics afternoon. Can you of little update give an opportunity? a us the

Sure.

the Fanatics on – board we’re that with think, know now, strategy. our our quarter I you on digital-first our of So fifth in beginnings

we’ve getting think the good out each more it sequential product producing progress door. made I and quarter and

And than Black have we to been continuing that quarter We to price our XX% a have week in the – best can see now know do over have on history is we history fourth that you that think then our ever we it’s grow. you that Friday this and up running our speak will from expect about will our output by running prior growth in come we shifts unit I and additional equipment the But more what in business. and business we and in then that our know in strong was we selling third maximize quarter. year, and output as

Our paid deliver garment door, that’s ever it’s what out is so price the and the print average we’re unit getting the highest been. to work the

seeing we’re by number that of some as appreciation pricing garment garments in on and So well. driven prints

And exclusive correct? garments, by provider produced these to for the digitally contract Fanatics we are

certainly vendors Well, you things to I wouldn’t don’t that or have we say that broadly. want other They a were that know part can’t of make.

equipment, what long to You provider. and geographic beyond or term type know can I footprint right the only be think demand of may we we’re their want do, but now this on

a adding demand we to amount point? Okay, to – and at – we there add capacity are or are we their substantial this need still of do have meet we mostly

No, you early we that know installing year. we’ll be order have additional equipment on next calendar

new that effort and period. meaningful staffed equipment. number XX a be to started make over a We’ve off on install earlier it and get during have get we hard holiday back installing take it to going year, in the you equipment to know and of the of get will you times up the this years when it’s So days learned cut time tried additional to

ahead, And Simone sorry. I’m go –

manufacturer of the – quarters the got the our facility prototype me we say, into facility mean ago. prototype, just Let just about from out five I got first their brought and we equipment, this we’re

locations, four running. running And the Through so week. other, seven holiday, shifts machines them days those we’ve we’ll gone from running in three one of different in prototype ago five locations run XX shift to we’re in quarters two and a one

a very so of working and know, a fast can you lot we’re them that’s hard environment Fanatics in also And start-up on, you to very know but product product we’re make sell dynamic. cheering

very that margin it’s when business? the the Yes, have what but – this exciting. talking is I about Simone, might you’re kind for roughly did gross you financials, missed of

we had historically gross So higher business? For have levels that margin. of

have last XX as have we print installed as has our we that the margins. equipment, that said, Over depressed months

We expect to margins to levels. back going forward take those historic

just the Fanatics talking to was you’re overall. about But business. understand I trying for

I I about specifically DTGXGo whole Group haven’t our the a referencing as Delta I’m of speaking – So part was spoken sorry, as Fanatics I business. was

Okay. DTG margins? And overall were the what

don’t different You the within disclose a know margins segment. we

costs So the selling little just again, would I very necessarily selling business, associated been, say other are but they’ve our there’s is a DTGXGo average – prices higher but not and margin and with highest just it.

well similar our lower, it has running And SG&A maybe when much slightly it Activewear margins so you but know basic business, to component. lower a it’s has then

you. question, thank of companies Is that and that you And major buying with that there seeing turn the isn’t the shift one being more stepping on-shoring some times inventory. and some capacity less filled a lot faster and now? from a right of – seeing attractiveness of are out could Understood, of presumably customers just absorb

that’s interesting fairly Well think yes, and to still seasonal one a business. it’s this about so about thing understand is business

component that’s holiday from merchandise seasonal You’ve got the big around driven a period. of it

sports leagues good Is the years of business. level we’ve events on while our it into one to So the has strategy out progress they support year Fanatics is that this know for the tended peaks the beauties around. but you business. definitely know have in make and gone holidays, you that years and of run And building the pretty to work as been a more

year-round of So it a is business. much more

where will just we building of of to do a on, what for our time. you strategic want take installing us to can equipment on think types more see continue period work business be versus year around that we more So, businesses I peak in

Great! that. Thank much for you very

Thank you.

Wilen Jamie Management. next Wilen Please [Operator of the from comes Instructions] with your proceed question question. line with Our

wise, run flat quarter, current between you’ll quarter be Hi! assume at the to capacity, Thanksgiving So I the certainly starting Christmas. seasonality Christmas and out full

Yes, more that we’ve already we’ve people last really adding gains, and for or been four we same think running the training on flat so hours some weeks But now. several of equipment. out get in productivity run five weeks I progress more the out made can

achieve Fanatics throughout the you business the seasonality, lessened be obviously you’ll remainder wise, what And not just capacity the quarter. to do of the seasonality year, percentage will think but of Christmas able then the

in to days a a define front is good we’ll you’re It I going honest many depends for how think answer how have plenty so I going run, of And shifts and you. on many to and be you’re fluid. you, you don’t to how me, with week run of know you have capacity capacity.

for You probably fall. up on we our until past through get of bit full start know then back that up we’ll time, still first January, strategy once very think on be period output we’ll running start slowing a February, into I the we and little gearing digital

CapEx going not that’s in you’re assume this just year, in bricks the spend The fiscal business on mortar. that to I and additional machinery and

Exactly.

sales the able whole of very Life, then up a you comment profitable? stores in of as stores And well. of they the and increase existing on level over actually the opened could to are then achieved And Salt all same-store a Okay. you the those volume moving bunch year. decent we’ve and of that to stores past Were already profitability, sales

thank So, Jamie. you,

store Destin challenges. before about we’ve well, they So as the weather Estero, you pleasing been to sales. hit flagship as certainly and of if increased a Florida see. same has in some is our have increased, certainly, as think very spoken being as which whole over about and stores million $X know you some such has sales That with

We they we stores stores where that the growth so still in continue. the have year, that in but have growth been of seen are mode, opened, have eight opened

for to you in know, want road Texas construction and in out start strong that Jamie, store work they there’s say if our know yet out my or strong our So see stay goals, and part some disappointment met we you I not I do stores is in around and general, store say of is would a of remain has start week would mind, weak. perhaps you that it. look they and kind

If of The the Rehoboth, you encouraging places long-term, them people to exceeds area seen know six for every we like built a very that. tea, our or out. Delaware me and store. our there is not has that Being Daytona most around week Now we’ve growth had shop, goal that attract have year know steady, destination to do five, get cup well. like has just people one as retailers still you been the been

New see, we’re to to nice been seeing that’s in So forward and looking Jersey. further north what happens

you locations of outlet, around some model tweaking an standing. have geographic bunch a you now with that and Are the different some free

the from forward, how change store business? As grown you model does move the how you’ve historically

Yes.

standpoint, consider get tend think right remain us. I branding but between feet, for and we we revenue a outlet now stores, there. are the profitability more more want we’ll and having about outlets profitable through a a We like the more mix what those mix model From stores. remain square of we to to X,XXX

Are are now on were have struggling in business, do the now, type And and website? merchandise there. you of the the have the right within that online full you expect growth that merchandise ability and seeing or see inventory business, we there we with what to you’ll to

So, thank you Jamie.

yes. certainly, So

at and stronger the fulfill through inventory e-commerce website business. the expected the of than to under in on year, wholesale directing were we, sales recall, you wholesale were If our much our came that inventory start ability to as

now identified within in as very and we channel Very in have centers available we’re have QX year-over-year wholesale, of well the distribution and terms future platform. e-commerce a that. e-commerce saw the we rectified our have and pleasingly, encouraged as growth retail area as by separate well, e-commerce of the We that and in in

see website refreshed to traffic. healthy the have We and continue

fiscal your this be? would the year, to of like where Fast end forward inventory level to you

the of anticipation So certainly, an falling year. we our levels inventory have through

those about that significant elevated through as inventories. Delta stores down, of have XX% inventory, sell and Life have proportion by the think and About over also Evergreen unadorned Salt are inventory inventory and as more composition inventory more expect is levels T-shirts Direct Delta inventory, to our we well come we our that do having of inventory so the our time inventory just now. Evergreen, a you of If those Direct

as line to inventory in expect our that do course small increase a inventory pace keep over of inventory, we fall [ph] we Direct the blank footprint, Salt see increasing the will store So Evergreen of Life year. there, the but we Delta that

how you problems cotton? they too and their and inventory a have could much higher everyone are about in your at that inventory addressing what comment Evergreen with cost the competitors to has And

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take inventories You’ll and recall, have fulfill get of darn the was year, production of our quarters first pretty landing takeoff don’t a that the the start we doesn’t It to that quickly, our have so. into couple orders the know smooth to do this to long right these at shutting inventories down and shape fiscal too many you time were too right and we’ll or general, have industry scrambling few and where hopefully service too and customers. we in

So we’ll remain mindful of that.

million objective? a $XX reasonable year inventory finishing Is with less the

Yes.

very Okay, good.

piece raw you of wanted to on investment. material the combination with it’s lower Life. Salt you You a I costs around obviously investment know Jamie with circle know just back e-commerce of units along less in

Salt what as pointed months. not really but an has e-commerce, types that we in even in accelerated have Life over years said and You XX bit now a of last for social different little reports further e-commerce following maybe had out many remarks, our prepared and the media following, know and outsized you gets it

think and got footprint. I even have awareness brand geographic the broader a Salt Life of the television and our and marketing that some building further done brand. shows has Value really the people of we’re great job brand So supporting a certainly

is in Delta e-commerce Life one Salt of think I So business. the our Apparel great opportunities untapped

course size times is on years, we social brand be should it know have. it interaction next the several of awareness media the over and you So the based the many that the

Go next and Okay, time… on. [Cross Talk]

piece margin of that well. business highest And as

Right.

Your business grow. Life? your the trajectory? Has is stores higher wholesale e-commerce to What are maintain going about a Salt going to grow, that been able to in

Those and Yes. orders our really they e-commerce business. was by We far best come was self-populated. that ever pointing things had that in, hurt last of out that one our year, the get Simone year

orders So to didn’t and then it sucks to up the inventory e-commerce. ship we support our inventory have those

have business. So been a that doors good being regular regular getting would wholesale we year to remain We another expect added good. and our feedback and good at pace, our has in

Okay. I appreciate Thanks it. fellows.

you Thank so much.

the now management I’ll of over remarks. have closing back reached our turn to we And call the end session, question-and-answer and the for

just season. in months. a on you holiday always, as great results for a you in interest Thank has quarter to your Delta right. Hope of first and look forward All we’ll here updating our couple Apparel everyone

this And concludes conference. today’s

disconnect You lines time. you at for Thank your participation. may this your