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spk03: Thank you, and good afternoon to everyone participating in Delta Apparel Inc.' 's Fiscal Year 2023 Third Quarter Earnings Conference Call. Joining us for management are Bab Humphries, Chairman and Chief Executive Officer, Justin Groh, Executive Vice President and Chief Administrative Officer, and Nancy Bibanik, Vice President and Chief Accounting Officer. Before we begin, I'd like to remind everyone that during the course of this conference call, Projections or other forward-looking statements may be made by Delta Apparel's executives. Such projections and statements suggest prediction and involve risks and uncertainty, and actual results may differ materially. Please refer to the periodic reports filed with the Securities and Exchange Commission, including the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q. These documents identify important factors that could cause actual results to differ materially from those contained in the projections or forward-looking statements. Please note that any forward-looking statements are made only as of today and accept as required by law. The company does not commit to update or revise any forward-looking statements, even it becomes apparent that any projected results will not be realized. I'll now turn the call over to Mr. Humphries. Please go ahead.
spk05: Good afternoon and thank you for joining us today and for your interest in Delta Apparel. Before we begin with a review of our third quarter results, I want to once again thank our teams throughout Mexico, Honduras, El Salvador, and the United States. I'm extremely proud of the way they have executed on a host of cost, inventory, and debt reduction strategies that have been very meaningful to our business and helped us navigate through an extremely challenging operating environment over the last several quarters. Their unwavering commitment to meeting the needs of our customers day in and day out is amazing. Looking at our third quarter results, as expected, parts of our business continue to be impacted by the well-publicized right-sizing of inventory levels across the retail supply chain, and our overall sales were down relative to last year's record buying activity in seller's market across the activewear industry. However, we were encouraged to see some preliminary signs that demand in the active wear market has begun to stabilize, enabling us to run our manufacturing plants closer to run rate capacities in setting the stage for improved operating performance in the fourth quarter and into fiscal 2024. I am pleased to report that we continue to see steady progress towards a more normalized cost environment for our business and we were able to work through much of the trailing impacts of last year's historically high-priced cotton flowing through our inventory and cost to sales during the quarter. Our decision towards the end of last year to curtail production levels to match the lighter industry demand and to purchase less cotton at what were heavily inflated prices proved to be strategically sound and has put us in what we believe is a solid competitive position moving forward. However, it is hard to overstate the impacts of the high-priced cotton and the muted buying activity across the activewear industry has had on our operating results. We believe it is essential to isolate these two unique impacts on our business in order to properly understand our operating results both this quarter and year-to-date as well as our positioning for sustainable improved performance going forward. In addition to the obvious margin pressure from a key raw material input like cotton escalating almost 100% above this historical averages, reduced production levels in our vertical manufacturing platform carry significant non-cash impacts from unabsorbed fixed overhead expenses, as well as significant cash costs from severance and temporary unemployment benefit payments required in the offshore jurisdictions that we operate. Without these unique cost drivers, our results for the third quarter and for the first nine months of our fiscal year resemble the solid operating performance we achieved in recent years. For example, our gross margins for the quarter were 13.1%, but adjusted for the cost impacts of these events, our gross margins were approximately 22%. Similarly, we reported an operating loss of $4.5 million for the quarter, but adjusted for the cost impacts of these events, we achieved operating income of approximately $5.5 million. The good news is that we see both of these unique trends diminishing, although we do expect some expense impacts from them in our fourth quarter results and in the first quarter of our next fiscal year as these expenses roll through cost of sales. In addition, Our decisive action to calibrate our production levels and moderate our inventory build, we also initiated a variety of strategic actions to better optimize our overall cost structure, including the transition of our more expensive production capacity in Mexico, where we have to purchase third-party textile fabric. Our lower cost Central America platform, served by our own textile manufacturing operations, will absorb this production. This transaction requires significant reductions in our offshore manufacturing workforce and associated severance payments benefits. We also consolidated the digital print capacity at a legacy facility that we assumed by an acquisition into our national footprint of hybrid print and distribution facilities. We estimate annual run rate cost savings of up to $6 million from these restructuring activities once fully implemented, but they also carried some significant one-time costs that impacted our year-to-date results, and we expect some additional one-time costs to complete certain initiatives in our fourth quarter. Nancy will now provide more detail on our reported and adjusted results in a moment, but let me now turn our call over to Justin to walk you through our business highlights in more detail. I'll join them at the end of the call in opening up for questions. Justin?
spk00: Thanks, Bob. As Bob mentioned, our teams have admirably executed on a variety of cost, inventory, and debt reduction strategies intended to counteract the challenging operating environment we've seen in recent periods, and their hard work is evident in our third quarter results. We ended the quarter with an approximately 13% reduction in our inventory from only six months ago in December, and expect further reductions as we move through the fourth quarter that should position us to enter the new fiscal year with appropriately balanced inventories. We also ended the quarter with a significant reduction in our long-term debt, which was down 15% from our most recent high, and expect to reduce debt further in our fourth quarter. The cost structure optimization initiatives Bob mentioned, along with our very disciplined spending, including less than $2 million in capital expenditures during the quarter, drove a 16% year-over-year decrease in SG&A expenses for the quarter. Now turning to our individual business units. Our Salt Life business continues to expand its direct-to-consumer footprint, recently opening its first two retail stores in New York and its 24th and 25th locations across the country. We now operate four Salt Life stores in the Northeast market, including our Rehoboth Beach, Delaware store opened last year and our recently opened location in Long Branch, New Jersey, and see a tremendous runway for growth there. Salt Life's branded retail footprint now extends across nine states, including California, Texas, Alabama, Georgia, Florida, South Carolina, Delaware, New Jersey, and now New York. Same-store sales for the quarter among our stores opened at least a full year, decreased approximately 3.5%, with the drop due to lower travel to the heavy tourist destinations where we target our retail strategy, as well as the suboptimal spring and summer weather conditions in these areas. Our key retail performance metrics, such as conversion rate, are generally holding steady, and we look for our same-store sales to return to growth when customer foot traffic picks up. Salt Life e-commerce sales continued their strong trajectory during the quarter, with over 100% sales growth versus the prior year. In addition, we saw significant double-digit growth in key e-commerce performance metrics, such as site traffic, conversion rate, average order value, and units per transaction. Along with Salt Life's growing licensed royalty revenue stream, which includes a new home furnishing partnership that we are extremely excited about, the e-commerce channel remains one of the most profitable distribution channels across our entire business. The e-commerce channel also continues to give us great visibility into the Salt Life brand's geographic appeal, which is extremely valuable in planning future retail site locations. Our new retail locations in the Northeast market are an excellent example of our data-driven approach to site selection. In recent years, the e-commerce purchasing activity in New Jersey and New York was consistently among the most active on our saltlife.com site, and we look for these store openings to contribute to a market halo effect, further driving e-commerce traffic among those visiting these high tourist traffic areas. As we noted on our last call, we expected the inventory overhang across the retail landscape and the ongoing U.S. consumer uncertainty to impact Salt Life's wholesale channel during the quarter, which they ultimately did. Much like our branded retail footprint, many of our wholesale accounts were also impacted by lower domestic travel activity in the late spring and early summer, particularly Salt Life's dealer base and heavier tourist destinations. All of these factors, coupled with last year's supply chain delays, concentrating more shipments and sales in the third quarter, created a challenging third quarter wholesale comp for the Salt Life business. However, for the full year, we anticipate overall sales growth at Salt Life and continued sales growth going forward. As a final note on the Salt Life business, we were very pleased to see the brand recently featured in the New York Times. The work the team has done to grow this powerful lifestyle brand across the United States and internationally and to do so profitably is something we are extremely proud of. Turning to our DTG2Go business, the team continued to make significant progress on a variety of production efficiency and quality initiatives during the quarter. We completed our goal of standardizing the operating software, ink, and humidification systems across our entire fleet of Polaris Digital First equipment. This initiative resulted in some necessary downtime and reduced capacity across the locations in our network where we operate this higher print quality equipment, but the consistency and quality gains coming out of this effort should significantly enhance our operating advantages and our go-forward service platform for our Digital First customer base. Our initiative to improve the within spec production rates on our Polaris equipment also progressed well during the quarter, and we continue to achieve record on quality rates on the cornete equipment we use outside of our digital first customer base. The increasing usage of our delta direct blanks by our customer base, which is now on a path for acceleration as we develop more proprietary fabrics and products optimized for digital printing, and the consistency advantages they bring compared to third-party garments are key drivers of our improvement in this area. Our recent initiative to concentrate our digital-first strategies primarily on high-usage product sizes and colors has been successful in achieving our consumer satisfaction targets to date. We now serve Digital First customers from three of our seven locations across the United States and are working towards reengaging a fourth location and reincorporating additional sizes and colors into our service offering as we move closer to the holiday season. We also intend to expand the usage rate on our fleece, youth, and big and tall products within our Digital First customer base going forward. Looking at our Digital First strategy from a broader perspective, The DTG2Go team's efforts over the last two years to incorporate an entire fleet of state-of-the-art printing technology, which we believe to be the largest and most advanced of its kind in the market, across multiple locations to serve a make-to-order customer base with the highest quality requirements in the industry, and to advance all of the operational and technical initiatives inherent in a strategy of that magnitude, have been exemplary. The scaled multi-technology solutions DTG2Go now offers provided with another unique competitive advantage in the market, as well as another driver in attracting more players across the decorated apparel space to digital, including more retailers, brands, and content companies. ETG2Go also reached an exciting milestone during the quarter by going live with a new proprietary online portal designed to facilitate customer orders for quick turnaround, lower unit volumes not suited for traditional screen print and decoration platforms. The new portal allows our wholesale customers to simply log in, upload an image file, and select desired colors and sizes, which can take only a matter of minutes. From there, DTG2Go does all of the work and delivers within two to three days. We believe our portal solution is tailor-made for the ad specialty and promotional markets, which is a huge and somewhat untapped market for DTG2Go. as well as small and mid-sized customers who do not have enough volume to devote resources to build a dedicated API with DTG2Go, as our larger customers do. The new portal is also ideal for traditional screen printers who have orders that they either can't fulfill due to time constraints or don't want to fulfill due to lack of profitability on smaller orders. We anticipate substantial near-term demand creation opportunities among these groups and plan to devote marketing resources to this area in the near term. More broadly, we believe the portal can be another accelerating factor for industry migration to digital print, fueling our overall growth and market share gains. From a macro perspective, we continue to strongly believe that the multi-billion-dollar decorated apparel market will gravitate to the speed to consumer, SKU customization, inventory efficiency, and other benefits of on-demand digital. DTG2Go, with its unique advantages including market leading print capacity, a nationwide fulfillment network, proprietary technology and processes developed over 15 years in the digital space, and vertical blank supply through Delta Direct, is best positioned to capitalize on this digital disruption trend. Given these dynamics and DTG2Go's recent productivity gains and solidifying operating picture, We expect a healthy double-digit sales growth trend and improved profitability at DTG2Go in fiscal year 2024. Now turning to our activewear business, which as a reminder, is organized around three key go-to-market channels. Delta Direct, which provides primarily blank garments to the screen print, promotional, and e-retailer markets, as well as retail licensing customers that sell into mass retail supply chains. Global Brands, which provides custom decorated retail floor-ready activewear to major brands, sportswear players, and the U.S. military, and Retail Direct, which provides decorated apparel to brick-and-mortar and online retailers. This business has experienced the vast majority of the impacts over the last several quarters from the cotton pricing and production curtailment trend Bob referenced earlier, primarily because it houses our entire vertical manufacturing platform outside of DTG2Go's digital print fulfillment network. and serves the channels hit hardest by the over-inventory environment among mass and mid-tier retailers. However, as Bob indicated, we are now in an improving cost environment, and our activewear business's vertical manufacturing platform is running at levels much closer to capacity. We are encouraged to see more signs that demand in the activewear market, including the retail licensing channel, may be stabilizing. With our decision last year to minimize our purchases of the high-cost cotton and more quickly get to the point where we are now, steadily seeing more normalized cotton costs in our inventory, we believe our activewear business is well-positioned to take advantage of market improvements and close out our fourth quarter and move into fiscal year 2024 with steadily improving operating performance. Let me now pass it over to Nancy for a review of our financial results.
spk01: Thank you, Justin. Before we get into our financial results, Please note that we will discuss a variety of financial measures that are adjusted to account for the cost impacts of the production curtailment activities, inflationary cotton, and strategic initiatives Bob referenced earlier, including non-GAAP measures such as adjusted gross margins, adjusted operating income, and adjusted net income. We believe it is important to evaluate our operating results this quarter and year-to-date in light of the impacts of these unique events. Listeners may access a reconciliation of those measures to gross margin, operating income, and net income, the most directly comparable gap measures on the investor relations page of our website at www.deltaapparelinc.com. With the third quarter entered July 1st, 2023, net sales were $106.3 million compared to the prior year third quarter net sales of $126.9 million. Salt Life Group segment net sales were $17.2 million compared to the prior year third quarter net sales of $20.9 million. with the year-over-year comparison skewed by significant sales occurring in the prior year third quarter due to transportation delays. Net sales in the Delta Group segment were $89.1 million compared to $106 million in the prior year third quarter. Gross margins were 13.1% compared to 24.2% in the prior year period, driven primarily by the production curtailment and inflationary cotton costs. Adjusting for these production curtailment and cotton cost impacts, third quarter gross margins were 22.7%. Delta group segment gross margins for the quarter were 5.9%, compared to 19.1% in the prior year period. However, adjusted for the production curtailment and cotton cost impacts, Delta Group Segment gross margins were 17.4%. Salt Life Group Segment gross margins for the quarter increased 30 basis points to 50.5% from 50.2% in the prior year period. SG&A expenses declined favorably to $18.5 million from $22.4 million in the prior year third quarter, while SG&A as a percentage of sales was down favorably to the prior year period at 17.4%. Operating income declined year-over-year from $9.3 million or 7.3% of sales to an operating loss of $4.5 million or 4.2% of sales. However, adjusting for the production curtailment and cotton cost impacts, third quarter operating income was 5.8 million or 5.5% of sales. Delta Group Segment Operating Income for the quarter declined from $10.7 million to a loss of $3.6 million. However, adjusted for the production curtailment and cotton cost impacts, Delta Group Segment Operating Income was $6.7 million, or 7.5% of sales. Fault Life Group Segment Operating Income for the quarter was $1.6 million, or 9.6% of sales. compared to $3.5 million and 17.2% of sales in the prior year period. Net income declined from $6.2 million or $0.88 per diluted share to a net loss of $6.3 million or $0.90 per diluted share. However, adjusting for the production, curtailment, and cotton cost impacts, third quarter net income was $1.2 million or $0.17 per diluted share. Net income for the quarter was also significantly impacted by the elevated interest rate environment, with our interest expense for the quarter essentially doubling over the prior year quarter. Net inventory as of June 2023 was $226.2 million, a sequential decrease of almost $30 million from December 2022, and generally flat year over year with inventory of $227.6 million, at June 2022. Our inventory decrease was a product of our team's excellent execution on a high-priority reduction initiative. Total net debt, including capital lease financing and cash on hand, was $166.2 million as of June 2023, an approximately 15% reduction from $194.3 million at March 2023 and a slight increase from $162.4 million at June 2022. Cash on hand and availability under a U.S. revolving credit facility totaled $14.3 million as of June 2023, a decrease of $12.9 million from December 2022, and $16.5 million from June 2022, with a decrease from December 2022 Principally driven by investments in the business support working capital needs as well as higher interest expense We spend approximately 1.5 million dollars on capital expenditures during the third quarter compared to 5.5 million dollars during the prior year third quarter with expenditures focused on salt life retail store build outs as well as facility and information technology enhancements For the nine months ended July 1st, 2023, net sales were 323.9 million compared to the prior year period net sales of $369 million. Salt Life Group segment net sales were $46.5 million compared to the prior year period net sales of $46 million. Net sales in the adult group segment were $277.5 million compared to $323 million in the prior year period. Risk margins were 13.5% compared to 23.6% in the prior year period, driven primarily by the production curtailment and cotton cost impacts coupled with the impacts of the strategic actions we undertook to better optimize our overall cost structure. Adjusting for the collective cost impacts of the production, curtailment, cotton, and strategic actions, gross margins were 22.7%. Delta group segment gross margins were 6.5% compared to 19.6% in the prior year period. However, adjusted for the collective cost impacts of the production, curtailment, cotton, and strategic actions, delta group segment gross margins were 17.2%. Salt Lake Group segment gross margins increased to 55.4% from 51.6% in the prior year period. SG&A expenses declined favorably to $56.7 million from $59.6 million in the prior year period, while SG&A as a percentage of sales increased from 16.1% to 17.5%. Operating income declined year over year from $29.5 million, or 8% of sales, then operating loss of $12.4 million, or 3.8% of sales. However, adjusting for the collective cost impacts of the production curtailment, button, and strategic actions, operating income was $20.5 million, or 6.3% of sales. Delta Group Segment Operating Income declined from $33.6 million to loss of $11 million. However, adjusted for the collective cost impact of the production curtailment, cotton, and strategic action, Delta Group Segment Operating Income was $22 million, or 7.9% of sales. Salt Life Group Segment Operating Income was $6.6 million, or 14.1% of sales. compared to $7 million for 15.3% of sales in the prior year period. Net income declined from $20 million, or $2.84 per diluted share, to a loss of $16.8 million, or $2.41 per share. However, adjusting to the collective cost impacts of the production curtailment, cotton, and strategic action, net income was $7.2 million, or $1.02 per diluted share for the nine-month period. Net income for the first nine months was also significantly impacted by the elevated interest rate environment, with our interest expense for the period essentially doubling over the prior year period. Now I'll turn the call back over to Bob.
spk05: Thanks, Nancy. With the two broad-based cost trends materially impacting our business over the last several quarters, Now more in our rearview mirror and our manufacturing platform running closer to capacity, we believe we are well positioned to capitalize on the early signals we are seeing of improving market conditions. The decisive and strategic actions we have taken to right-size our cost structure, manage our inventory to the current demand environment, and reduce debt should provide significant benefits going forward. We expect to see steady improvements in our operating results as we close out our fourth quarter and move in to next fiscal year. For fiscal year 2024, we currently anticipate net sales in a range of $410 to $425 million, generating operating profit margins of 3.25 to 4.25%, with gross margins sequentially increasing into the low to mid-20% range in improving operating margin profits beginning in the second quarter as well as revenue growth in the back half of the year. Delta Apparel remains in excellent position to take advantage of favorable changes in demand as they arise across our five go-to-market channels. We will look to further expand our customer and channel reach as we seize on the many opportunities created by a highly diversified operating model. Our balance sheet is steadily improving and we remain keenly focused on growth, profitability, and above all, creating value for shareholders for many years to come. And now, operator, you can open up the call for any questions we may have.
spk03: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your telephone keypad. You will hear a three-tone prompt acknowledging your request Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the two. One moment, please, for your first question. Your first question comes from the line of Donna Telsey from Telsey Advisory Group. Please go ahead.
spk04: Hi, good afternoon, everyone, and nice to see the progress. A couple questions. As you think about the business excluding the production curtailment and cotton costs, does this go on for the next three quarters? When do you anniversary it? How do you think of when it's a steady state? And when you talked about the next question is about when you think about 2024, you just mentioned gross margins in the low to mid-20s and the operating margin obviously low single digits. Given that, how are you thinking about SG&A Or is there some variability so that there can be room for more leverage to maybe get that operating margin higher? Would it be unreasonable to think that if all things went well, could it be a mid single digit operating margin? Thank you.
spk05: Yes. Certainly, in looking into next year, we're looking at where we have cotton fixed and where we see that marketplace going. We also look to see at what rates we expect to run our manufacturing facilities while continuing to reduce inventory. Obviously, we continue to comb our company and look for savings and efficiency gains in SG&A costs. We'll continue to work on that as the year progresses and certainly don't think mid-single-digit operating profits as we progress through the year are out of the question.
spk04: Thank you. And then when do you anniversary the product costs that we talked about and the changes there, the production curtailment and the cotton costs? When does that normalize and how are you planning interest expense going forward?
spk05: So, you know, each really month now we're getting to lower cost production, lower cost raw materials. It will be into our second quarter before what we would say is more completely normalized raw material costs flowing through our cost of sales. We are receiving and starting to process, you know, materially lower priced cotton in our manufacturing operations. So that will that will continue as the year goes on.
spk04: Got it. And just lastly, can you expand on the demand improvement that you're seeing, particularly in active wear, which customer bases, how you're thinking about holiday right now, and at what capacity are the facilities now running? Thank you.
spk05: So, we'll be running our facilities, you know, as we go into our first fiscal quarter and the remainder of our fourth quarter. at probably about 90% of what we consider normal manufacturing output. So we expect to continue to decrease inventories as we progress through fiscal 2024. And I would say most of our channels are showing improvement in demand with the exception of our global brands where that customer base You know, their demand held because we had pre-booked business, and, you know, they took the orders that were on the books with us. But they're, you know, as you hear all of their calls, obviously working on reducing their inventory level. So that business is slower, and we expect it to be slower through most of fiscal 24. Thank you.
spk03: Thank you. Once again, should you have a question, please press star, then the number one on your telephone keypad. And your next question comes from the line of Samuel Johnson from Johnson Investment. Please go ahead.
spk08: Yes, good afternoon. Can you, first of all, give us an update on the Fanatics business?
spk05: Yes, happy to do that. So, as I'm sure you're probably aware, During the last quarter, we went through all of our production facilities that house our new Polaris equipment and reset all of that. We received that equipment. There's 13 unique pieces of production equipment over a period of probably two and a half quarters. And they were not all exactly the same and we needed them to be all exactly the same to meet the production requirements that we needed to meet and Fanatics was asking us to meet. That process went well and we completed that on time and feel very good about how that equipment is now set up and everyone on the same art system and everyone on the same ink system and everyone on the same version of software that's running the various pieces of equipment. And so our consistency and quality has improved dramatically. We have also limited what types of products that we will print on as we work on customer satisfaction, our customer being Fanatics and their end customer as well. So that has progressed well. And we started that production back up a little ahead of schedule. We never completely shut down manufacturing output at our Phoenix facility. We next started up our Cranberry, New Jersey facility. We're now starting up our Dallas, Texas facility. And in the coming months, we'll be starting up our Fayetteville, North Carolina facility and would expect to go into next holiday season, running all of our equipment at the pace that we so choose to do with labor availability and order demand.
spk07: That's great. And so are we looking at the substantial demand from Fanatics taking until the second half of 2024 or even 2025, or could it be sooner than that?
spk05: Well, I think it can be sooner than that. I think Fanatics has demand. And, you know, they work with us about restarting equipment and the pace that we want to do that and that they want us to do that. But I think Fanatics has solid demand. It's seasonal. So the summer is really the slowest period of time. But as the NFL kicks off, particularly regular season, then their demand starts picking up. And you know, runs through, you know, obviously NBA basketball playoffs and that sort of thing.
spk07: Great. And obviously you will have the capacity to meet the demand should it come, right?
spk05: I think Fanatics will have more demand than we have capacity. You know, they have a great site and a lot of content out there. and we'll manage that together about what types of products and the capacity that we can run that and meet the other criteria of time to delivery to their end consumer and quality and what have you.
spk07: And then talking also about capacity, if there is – you know, there's been obviously a lot of ink spilled about the whole reshoring effect. If there is a substantial reshoring that really happens, especially from – garment manufacturing in China. Do you expect that, or I should start with, do you see that trend happening, or is it still more conversation at this point and companies wanting to hedge their bets but not actually moving to production yet?
spk05: So I'd say, you know, a year to 18 months ago, we actually saw companies moving production to this hemisphere. And, you know, we've seen that slow up. you know, a good bit with, you know, just the effects of business in the last three or four quarters. And so, and I'd say pricing out of Asia has dropped pretty dramatically. So it will be interesting to see exactly where this trend goes, you know, in the ensuing quarters when raw material pricing around the world gets back to a more normalized level and hopefully demand gets back to a more normalized level.
spk07: Great. And then finally, just on the balance sheet, obviously you're lowering your inventory, and we talked about the SG&A. No need, I assume, to be raising cash at this point?
spk06: That's correct. Okay. Thank you. Thank you.
spk03: Thank you. And your next question comes from the line of Flynn Perry from Millen Management. Please go ahead.
spk02: Hi. How are you today?
spk06: We're good. Hope you are.
spk02: I am. Thank you very much. I have a couple of Salt Life questions. You opened a few stores up north. Rojo was last year in New York and New Jersey this year. I was wondering how these stores are doing relative sales. to your other stores and how it impacts your future strategy and the new store locations.
spk05: Sure. We've been extremely pleased with those four stores. We are now anniversarying a year in Rehoboth Beach and are seeing continued growth out of that location, which has, again, performed very well. One of our New York stores, actually, we did a soft open on a Saturday, and it was our largest single store sale day in our history. So there's been a lot of demand in the New York area. We had good shipping data from our e-commerce sites about the New Jersey and New York population gravitating to Salt Life and buying our products. So we've been really happy. in all four of those locations as they've started out.
spk02: Awesome. Okay. Well, Salt Lake's a great lifestyle brand, and so many want to tag along with you. You announced a partnership with a furniture manufacturer. Given that royalty income is 100% profit, it would be exciting to see these partnerships in the future. Is it easy to envision I felt like sunscreen and other products within the fishing and boating industries. Can you talk about the possible other industries targeting you?
spk05: We get a lot of inquiries about partnering with us and people want to leverage the Salt Life brand. We're extremely careful in that arena. A, it needs to move the needle for us. and B, we need to understand what the distribution will be. And probably most importantly, we need to think about how our consumer will resonate with that product or not. So our mantra there is do no harm. So not taking on the license might defer a little bit of royalty income, but what we certainly don't want to do is end up associating with a product or product a brand that really doesn't resonate with a Salt Life customer and maybe turns them off on our product or lifestyle approach.
spk02: Okay. All right. Thank you very much.
spk03: Thank you. Mr. Hemphreys, there are no further questions at this time. Please proceed.
spk05: Okay. Well, thank you all for joining the call today, and we look forward to a further update at our year end and certainly going into next fiscal year. Thank you.
spk03: Thank you, ladies and gentlemen. That does conclude our conference for today. Thank you all for participating. You may all disconnect.
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