Love Junkfood?

Delta Apparel certainly does, because its Junkfood Clothing business, with its fashionable retro T-shirts, has helped to increase sales and profits and investors' appetite for its shares.

Brant Sanderlin/Staff (ENLARGE)

Robert W. Humphreys, chief executive of Delta Apparel: Since spun off from South Carolina-based Delta Woodside Industries in June 2000, shares have appreciated more than sevenfold.

AT A GLANCE • Clickable ticker: DLA • Headquarters: Duluth • CEO: Robert W. Humphreys • Employees: 4,100 • Business: Designs, manufactures and markets knit apparel, including undecorated T-shirts, golf shirts and tank tops, selling mainly to distributors, screen printers and private label accounts. • Online: deltaapparel.com REVENUE • 2005: $228 million • 2004: $208.1 million • 2003: $129.5 million • 2002: $131.6 million • 2001: $120.4 million NET INCOME • 2005: $11.2 million • 2004: $9.7 million • 2003: $6 million • 2002: $6.4 million • 2001: $9.9 million NET INCOME PER SHARE • 2005: $1.33 • 2004: $1.16 • 2003: 73 cents • 2002: 71 cents • 2001: $1.01 WANT REPRINTS? Our provider can reformat articles, with accompanying photos and graphics. Get more information on custom reprints — and custom plaques.

Spun off in June 2000 by South Carolina-based Delta Woodside Industries, a textiles manufacturer, Delta Apparel's shares have appreciated more than sevenfold, or at an annual rate of 45 percent. The dividend, increased every year since it was first paid in 2002, boosts the total annual return to nearly 47 percent.

That's not bad for a relative pipsqueak in the multibillion-dollar apparel industry. Delta Apparel reckons its sales will reach about $275 million in the fiscal year ending July 1, with per-share profits of $1.71 to $1.77. It earned $1.35 in the prior year, including one-time gains of 34 cents.

The company, based in Duluth, isn't on the radar screens of most investors. Only one analyst tracks the stock. And the shares are thinly traded. Just over half of the 8.6 million outstanding are owned by institutional investors, including mutual funds that invest in small-cap issues.

Insiders, including Chief Executive Robert W. Humphreys, own roughly 30 percent.

Sales and earnings have blossomed since 2003, when Delta Apparel entered the branded apparel business to widen its profit margins and extend its reach into other distribution channels, including specialty, midpriced and high-end retail stores.

It first snapped up the M.J. Soffe Co. For the uninitiated, Soffe shorts, sold in sporting goods stores and now available in 36 colors, are a hot item with adolescent girls, particularly those on cheerleading and dance teams.

Last year, Delta Apparel picked up Junkfood Clothing, which embellishes its stylized T-shirts with licensed logos and designs. These include My Little Pony and the Rolling Stones' "Red Tongue" logo, as well as those of Tootsie Roll, A&W Root Beer and others.

Why Junkfood's satisfied

The T-shirts, sold at retailers such as Nordstrom's, have a loyal following. They also move faster than Delta Apparel's other merchandise, helping to reduce the risks associated with fashion items. The shirts are made to order, with the designs specified by the retailer, and shipped six weeks later. The company's other garments are manufactured ahead of time and housed at distribution centers until orders arrive.

Delta Apparel's basic stock in trade is selling blank T-shirts and sweatshirts to screen printers and others. That now accounts for about half of total revenue and continues to shrink as the branded side expands. It's a price-competitive business, but one that remains profitable and one the company intends to grow.

"We expanded into the fleece business about a year ago, and we've added additional products to our line, such as different-weight Ts and a toddler line of Ts," Humphreys says.

Unlike many rivals, Delta Apparel prefers to deal directly with its more than 13,000 customers, instead of through distributors. It doesn't want to become dependent on any single customer. Besides, small customers pay with credit cards, and the company doesn't have to extend terms.

With the exception of the Junkfood Clothing line, Delta Apparel still makes most of its own garments in the United States and overseas. Many apparel companies, such as Atlanta-based Carter's, no longer own and operate factories, preferring to deal with contractors.

What's next? Humphreys won't say. But Delta Apparel this month disclosed that it has licensed the Soffe brand to a firm that will launch a line of accessories next spring, including color-coordinated flip-flops, scrunchies, socks, cinch sacks, hair bands and ties.

Retailers such as Claire's Stores have demonstrated that accessories are a growing and profitable category, especially among preteens, teenagers and young adults.

"You've got to realize that the apparel markets in this country are huge and, really, most any apparel producer is supplying niches within that very large market," Humphreys says. "What's really important is how individual companies position themselves to compete in the areas they so choose.

"Our basic business interest is producing relatively simple apparel that generally can be produced in the Caribbean Basin, or easily sourced around the world, and then marketing those products across broad ranges of distribution."

So far, it's a formula that's worked.