Delta Apparel Shutters DTG2Go Division

Amid talk of a potential bankruptcy, Counselor Top 40 supplier Delta Apparel (asi/49172) has closed DTG2Go, a business unit that offered print-on-demand solutions in the direct-to-garment printing medium.

In a June 18 filing with the Securities and Exchange Commission (SEC), Delta Apparel said it ceased all operations related to DTG2Go on June 13. Reportedly, 115 employees were let go.

Delta Apparel is permanently closing the DTG2Go facility in Storm Creek, IA. The SEC filing noted that the company is also shutting down printing facilities that had been devoted to its Delta Group business unit in Cranbury, NJ; Fayetteville, NC; Phoenix; LaVergne, TN; and Miami.

Delta Apparel believes it will have wrapped up the DTG2Go exit plan within 120 days. The publicly traded firm expects to incur restructuring charges in the third quarter of 2024 related to the shutdown.

“The company has been keenly focused on evaluating its business strategies and managing its working capital and costs in light of significant market, operational and liquidity challenges,” Delta Apparel said in the SEC filing.

Those challenges have come at a time of plummeting sales, steep losses and high-profile executive departures that reportedly have the Duluth, GA-headquartered apparel maker considering bankruptcy.

Earlier this week, Delta Apparel announced that it is suspending operations at its manufacturing plant in Honduras, a move that reportedly affects 2,413 employees.

An SEC filing noted that the suspension came as Delta Apparel has decided to drawback from its Delta Activewear Global Brands channel. The company is exploring “strategic initiatives involving its offshore manufacturing operations, which may include a sale or a permanent wind-down of all such operations,” the filing stated.

A drop in demand has been a key factor in sales declines and related losses that have left Delta Apparel short of the funds needed to buy yarns and other production inputs required to operate its manufacturing facilities. The publicly traded company is also finding it difficult to come by capital because it’s out of compliance with a covenant within its revolving credit line.

Former Delta Apparel CEO Robert W. Humphreys was forced to resign in May. A week after that, two members of the firm’s board of directors quit their posts, while last week the president of the company’s Delta Group, whose focus includes business within the promotional products industry, left along with another executive. The company has appointed a chief restructuring officer whose expertise includes liquidation management and asset sales.

In May, Delta Apparel reported that its fiscal half-year total company revenue dropped 27% as it sustained a $44.8 million loss. In the 2023 fiscal year, which ended Sept. 30, it had a $33.2 million annual loss as sales eroded by 14%.

Based on estimated 2022 North American promotional products revenue of $49.6 million, Delta Apparel ranked 37^th on Counselor’s most recent list of the largest suppliers in the industry. The new list is due out this summer.