TSL Express Daily News

Delta Apparel has filed for Chapter 11 bankruptcy protection in the District of Delaware court. The news was announced following several challenges the apparel supplier faced over the course of the last several months, including the closure of its DTG2Go business and the departure of several key executives.

In addition, the company has also agreed to sell its Salt Life brand for a reported $28 million.

According to news reports, the bankruptcy filing was dated June 30. The company 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,” The Street news outlet shared. Delta Apparel’s largest creditor is Park Mills, which it reportedly owes over $22 million to Seeking Alpha shares that the debtors will continue to operate their businesses as a debtor-in-possession as well as pursue a structured sale of their assets. This will be pursuant to one or more competitive bidding processes or other strategic plans involving such assets.

At this time, the company has not shared its full bankruptcy plans.

Sale of Salt Life Brand

Delta’s Salt Life brand is also in flux, as the company plans to sell it to Delaware-incorporated firm FCM Saltwater Holdings. The news was shared in an Securities and Exchange Commission (SEC) filing. This move came prior to the bankruptcy filing, according to Delta. The purchase price (to be paid in cash) is subject to adjustment and needs court approval. That number stands at $28.03 million.

Experts Weigh in on Bankruptcy Filing

Before the company officially filed for bankruptcy, experts discussed that it was a possibility given the struggles the company has face for quite some time. In an article from Just Style, Neil Saunders, a GlobalData retail analyst, broke down what the challenges meant for the company.

“The main problem for Delta Apparel is the demand for many of its products have declined steeply,” Saunders offered in the article. “The retailers it sells to via wholesale have cut back on inventory and orders as customers have reduced buying activity. This has put the squeeze on Delta.

Adam Tanaka, merch consultant and brand specialist in the apparel industry, believes that Delta tried to do things differently for a long time. Some of it went well, some of it didn’t. “There are companies that march by the beat of their own drum, but when the drum beat loses the rhythm and the marching is out of step, the audience will get bored and move on,” he feels. “Trends change, needs change, and we have to take into account that a pandemic shook up the world. But when these things happen, timing is everything.”

The company reported a challenging start to FY24 with a decline in net sales and operating income during the first quarter. Losses grew even more in the second quarter, when sales decreased in the Salt Life Group and Delta Group segments.

“With a company that has a portfolio of a popular beverage and lifestyle brand, the launch of DTG2Go, providing wholesale blanks at low prices, and the acquisition of Autoscale.io, I’m curious to know if the thought of buying up and launching things were more fun than strategizing scalability and sustainable growth,” Tanaka speculates.

And while he doesn’t feel this reflects any sort of industry trend, he does hope it will shake things up. “Our focus should be on better understanding growth strategies and cashflow, implementing effective systems, collaboration, and community-building,” Tanaka suggests. “At the very least, maybe this can serve as a nudge to check in on your company finances a bit more often.”