Robert W. Humphreys has resigned as CEO and chairman of Delta Apparel (PPAI 188431, Gold) – ranked the No. 69 supplier in the 2024 PPAI 100 – at the request of the board of directors, according to a filing with the Securities & Exchange Commission.

Humphreys, who joined the Duluth, Georgia-based company in 1998 as CEO and became chairman in 2009, submitted his resignation on May 16.

  • His final day with the firm will be June 29.

Delta Apparel has appointed Tim Pruban as its chief restructuring officer, according to the filing.

  • Pruban is the founder of Focus Management Group, a national financial advisory and management consulting group.
  • His role at Delta Apparel will be to advise the board on succession planning.

Financial Struggles

Two weeks ago, the apparel maker reported that its net sales for the fiscal second quarter were $78.9 million, down nearly 40% from the same period last year.

  • Net sales from its retail stores segment – Salt Life Group – were $15.5 million in Q2, down about 22% from Q2 2023.
  • In the 2023 fiscal year, which ended September 30, 2023, Delta Apparel reported a loss of $33.2 million.

“Fiscal 2023 was undoubtedly a challenging year for our company and the industry given the reduced demand environment following last year’s post-pandemic seller’s market,” Humphreys said at the time. “However, it was also a transformative year for our company where we implemented a number of needle-moving initiatives across our business that set the stage for significant operational improvement.”

Delta Apparel also reported it’s been non-compliant with a financial covenant contained in its U.S. revolving credit facility that required its financial results to “improve at a rate faster than we experienced during the second quarter and at a faster rate than we expect to experience over the next 12 months.”

  • According to the company, its lenders have elected not to declare the principal and all other amounts owed to be immediately due and payable.

However, if the lenders do call such debt during the next 12 months, Delta Apparel says it won’t have readily available funds to repay the debt, raising “substantial doubt about the company’s ability to continue as a going concern.” If the firm can’t address such concerns, it may seek relief under applicable bankruptcy laws, according to the quarterly report.

  • Additionally, the company says it was notified by certain suppliers in January that they would no longer extend credit in amounts or terms to the extent previously allowed, limiting Delta Apparel’s ability to obtain raw materials.

Furthermore, its DTG2Go digital-print business recently received notice that its largest customer no longer intends to source production from the platform. As a result, the company expects to receive an impairment charge in the third quarter of fiscal 2024.