Delta Apparel Suspends Operations at Honduras Facility

Counselor Top 40 supplier Delta Apparel (asi/49172) is suspending operations at its manufacturing plant in Honduras, a move that will reportedly affect 2,413 employees.

The shutdown, which will last at least 120 days, is a result of ongoing liquidity challenges that have come amid a time of plummeting sales, steep loses, and high-profile executive departures that reportedly have the Duluth, GA-headquartered apparel maker considering bankruptcy.

In a June 17 filing with the Securities and Exchange Commission, Delta Apparel said the operations suspension at the Honduras facility follows the wind-down of a factory in Mexico earlier this year. The firm is also looking to sell its El Salvador-based manufacturing facility.

The SEC filing noted that the moves come as Delta Apparel has decided to drawback from its Delta Activewear Global Brands channel.

Delta Apparel 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. “The company expects to finalize its plan regarding its offshore manufacturing operations and substantially complete its implementation within 120 days.”

After a run of dismal financial results, Robert Humphreys is out as CEO of Top 40 supplier Delta Apparel, which has hired a restructuring specialist.https://t.co/bqgNiJ96nJ

— Chris Ruvo (@ChrisR_ASI) May 23, 2024

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

“The company’s deteriorating liquidity position and lack of funding has continued to prevent it from purchasing raw materials necessary to operate its offshore manufacturing facilities and to pay compensation and benefits due to offshore employees,” the June 17 filing stated.

Delta Apparel has previously indicated that it “may seek relief under applicable bankruptcy laws.”

A $23.5 million real estate deal has fallen through and two more company leaders are departing as the woes for reeling Top 40 #promoproducts supplier Delta Apparel keep coming amid talk of a potential bankruptcy.https://t.co/kCXkuTU7Cw

— Chris Ruvo (@ChrisR_ASI) June 12, 2024

The June 17 filing didn’t rule out that option, saying that the company “continues to explore the potential sale of its [retail brand] Salt Life business and continues to evaluate all strategic options and alternatives with its legal and financial advisor.”

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.

Last week, Delta Apparel announced that the president of its Delta Group, whose focus includes business with the promotional products industry, was leaving along with another executive. Also, Delta revealed that Elkay Partners had exercised a discretionary right and terminated its hitherto planned $23.5 million purchase of Delta Apparel’s 35-acre campus in Fayetteville, NC.

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.