Declining sales in its business division that services the promotional products industry and other markets was one reason that Top 40 supplier Delta Apparel’s (asi/49172) total company sales dropped 16% year over year to $110.3 million in the firm’s fiscal year second quarter.

The publicly traded Duluth, GA-headquartered apparel maker/marketer experienced a loss of $7 million, or -$1.00 per share, during the three-month Q2 span, which concluded April 1. Gross margins retreated – from 25.7% the year prior to 14.7%.

Delta Apparel sells into a variety of market verticals. Its “Delta Direct” channel services the screen print, promotional products and e-commerce markets, as well as retail licensing customers that sell through to mid-tier and mass market retailers.

The Delta Direct segment didn’t fare well in the firm’s second quarter.

“In our Delta Direct channel, the well-publicized high inventory levels and lower demand across the blank tee industry continued to impact our business and drove overall sales below our expectations for the quarter,” Delta Apparel said in an SEC filing.

It appears, though, that business in the promo sector wasn’t the weakest link in the segment’s disappointing performance. The SEC filing continued: “The retail license customer base selling into mid-tier and mass retail supply chains continues to be the primary area of softness in this channel.”

There were positives to report though, too, executives said.

Delta Apparel achieved double-digit sales growth across three of its five go-to-market channels. That included nearly 20% topline growth in DTG2Go, an on-demand direct-to-garment digital print and fulfillment provider whose customers are retailers and brands.

For the first six months of its fiscal year, Delta Apparel sustained a loss of almost $10.6 million, or -$1.51 per share. Total topline sales are down 10% to $217.63 million.

 “We remain keenly focused on managing our working capital, reducing inventory and debt levels, and leveraging the many opportunities across our business to provide higher-margin and quicker-turn ‘consumer ready’ products,” said CEO Robert W. Humphreys. “Executing on these initiatives and working through the remainder of last year’s high-price cotton inventory sets the stage for improved operating results as we move through the second half of our fiscal year and positions us to capitalize on accelerations in demand.”

Based on estimated 2021 North American promo sales of $46.7 million, Delta Apparel ranks 34^th on Counselor’s most recent list of the largest suppliers in the industry.