A Struggling Clothing Brand Now Files For Painful Bankruptcy

A struggling clothing brand has now filed for a painful bankruptcy after a dwindling demand and a change in consumer taste.

Delta Apparel is not a very well-known company but does own a variety of well-known clothing brands such as Callaway, Perry Ellis, Soffe Apparel, Burnside, and Salt Life.

The company operates as a wholesaler under the Delta Apparel name.

The company first went public in June of the year 2000 and has traded as high as $34 in 2021.

For over 100 years, Delta Apparel has strived to bring people closer to what they love. We work hard every day to remain on the cutting edge of the marketplace by delivering the quality, selection, and innovation you and your customers want — at extremely competitive prices,” the company shared on its website. “…Delta Apparel is your one stop shop for apparel and accessory needs. Whether you’re looking for rugged workwear, corporate apparel, workout, and athletic gear, or simply your new favorite tee it’s all here — at Delta Apparel.”

Delta Apparel’s financial situation has been in decline ever since their stock closed at 58 cents this Friday and its second-quarter results had even more troubling numbers:

Operating loss increased from $5.3 million in the prior year period to $24.4 million.

Gross margins were 4.3% compared to 14.7% in the prior year period, driven primarily by production curtailments in the Delta Group segment.

Net sales were $78.9 million, down 28.4% from the year earlier sales of $110.3 million.

Cash on hand and availability under our U.S. revolving credit facility totaled $11.8 million as of March 30, 2024, an increase of $4.4 million from December 2023 and a decrease of $2.4 million from September 2023,” shared Delta Apparel.

Delta Apparel filed Chapter 11 bankruptcy in U.S. Bankruptcy Court in Delaware. with its filing date being June 30.

The company has reported between 200 and 299 creditors and debts and assets each in the $100 million to $500 million range.

As of June 1, the company had $337.8 million in total assets and $244.5 million in liabilities, according to the bankruptcy filing.

Delta Apparel’s largest creditor is Park Mills, to which it owes over $22 million.

The main problem for Delta Apparel is the demand for many of its products have declined steeply. The retailers it sells to via wholesale have cut back on inventory and orders as customers have reduced buying activity“, GlobalData retail analyst Neil Saunders told Just Style.

The clothing company did not share a full bankruptcy plan, neither has it made any public comment on its ongoing operations, reports The Street.

For more bankruptcy news and updates like this, opt-in for push notifications.

Also Read: Another Mall Clothing Retailer Now At High Risk of Bankruptcy

Other Economy News Today

Market News Today -A Struggling Clothing Brand Now Files For Painful Bankruptcy.
Market News Today -A Struggling Clothing Brand Now Files For Painful Bankruptcy.

An essential company now files a surprising bankruptcy after miscalculating demand for its inventory after the Covid-19 pandemic.

Supply Source Enterprises, a leading provider of branded and private label cleaning products and personal protective equipment, on May 21 filed for Chapter 11 protection to seek a sale of its assets.

Supply Source brands include The Safety Zone and Impact Products.

The Guilford, Connecticut debtor listed $50 million to $100 million in assets in its petition and $180 million in funded debt, which includes $80 million owed on a term loan credit facility, $60 million owed on an asset-based loan, and about $40 million in unsecured debt.

Before the Covid-19 pandemic, which generated huge demand for cleaning supplies and personal protective equipment in 2020, Supply Source had been consistently profitable with stable single-digit growth, according to a declaration from the debtor’s Chief Restructuring Officer Thomas Studebaker.

Once the pandemic hit in 2020, the debtor had substantial growth due to high demand for safety, hygiene and sanitation products

The debtor reported adjusted Ebitda of $93 million in 2020 which was nearly a 300% increase over the previous year.

However, the company’s financial performance deteriorated in subsequent years.

Based on the unprecedented demand in 2020, the company commissioned an industry study in early 2021 that concluded that the Covid-19 pandemic would fundamentally change the cleaning supplies and protective equipment industry and market for its products.

The study also estimated that the company’s Covid-related growth would likely be sustained through 2024.

In contemplation of continued customer demand at elevated prices, based on the study’s data, the debtor increased purchases of inventory even though the costs were higher due to supply chain constraints during the pandemic.

Despite the study’s assurance that growth would be sustained for years, the pandemic’s positive effect on the market faded by the end of 2021 and demand for PPE decreased to normal rates, reports TheStreet.

The reduction in demand led to large amounts of excess inventory that the company could not sell in the same quantities and prices.

The excess inventory forced the debtor to secure additional storage space, which increased storage costs.

These factors tightened the company’s liquidity and led to a decline in annual revenue in 2023 by 26% from 2022, resulting in a negative 2023 Ebitda of $13 million.

The debtor’s liquidity issues led to it being overdrawn on its asset-based loan facility by $30 million.

The ABL lender in February 2024 swept the debtor’s bank accounts, further impacting the company’s financial distress.

For more news and updates like this, opt-in for push notifications.

Market News Published Daily 📰

Market News Today -A Struggling Clothing Brand Now Files For Painful Bankruptcy.
Market News Today -A Struggling Clothing Brand Now Files For Painful Bankruptcy.

Don’t forget to opt-in for push notifications so you don’t miss a single article!

Also, thank you to all of our blog sponsors.

This year we’ve been able to increase push notifications slots making it more convenient than ever for new readers to receive their daily market news and updates.

Our readers can now donate $3 per month to support independent journalism.

For daily news and updates on your favorite stories, opt-in for push notifications.

Follow Frank Nez on X (Twitter)Instagram, or Facebook.


Support Independent Journalism ✍🏻

Support independent journalism for just $3 per month!

Your contributions help power Franknez.com as the cost of widgets and online tools continue to rise.

Thank you for your support!



2 Comments

  1. Curating Team

    Leave your thoughts below.

  2. Curating Team

    For more news and updates like this, opt in for push notifications.

Leave a Reply

Your email address will not be published. Required fields are marked *

© 2024 Franknez.com

Theme by Anders NorenUp ↑