Gildan Issues Third Quarter Financial Results
Supplier Gildan (PPAI 250187) released financial results today for third quarter, ending October 1. The Montreal, Quebec-headquartered supplier reported net sales of $716.4 million in the quarter, essentially flat from the year-ago figure, as the printwear segment’s sales growth—buoyed by the acquisition of American Apparel—was offset by a decline in branded apparel.
Gildan generated earnings per share (EPS) of 52 cents in third quarter and adjusted EPS of 53 cents, a six percent increase over third quarter 2016. Stronger than expected adjusted EPS was due to more favorable product mix in printwear, earnings contribution from the impact of the American Apparel transaction, and lower income taxes, partly offset by lower than expected branded apparel sales, reflecting the continuation of a challenging retail market. The company also reports progress in the integration of American Apparel, including the continued ramp up of production and the launch of a consumer e-commerce platform.
Printwear’s net sales for third quarter were $480.7 million, up $18.8 million, or 4.1 percent over the same period last year. The increase reflected a sales contribution of $15.4 million from the acquisition of American Apparel, continued strong growth in fashion and performance basics which contributed to favorable product mix, double digit unit sales volume growth in international markets, and higher net selling prices, partly offset by lower sales of basics.
Net sales for the branded apparel segment in the quarter were $235.7 million, down $17.4 million, or 6.9 percent compared to the third quarter of 2016, mainly due to weakness in the sock category, particularly in department stores and national chains, as well as the sporting goods channel, combined with the unfavorable impact from the transition to a new sock program at a mass-retailer. Lower sock sales in the quarter were partly offset by higher sales of Gildan branded men’s underwear compared to the third quarter of 2016 and strong performance of activewear.
Consolidated net sales of $2,097.1 million in the first nine months of 2017 was up $99.9 million, or five percent compared to the same period last year, reflecting sales increases of 6.1 percent in the printwear segment and 2.8 percent in branded apparel. The increase in consolidated net sales was mainly due to the impact of the 2016 acquisitions of Alstyle and Peds and the American Apparel acquisition which closed during the first quarter of 2017, as well as higher net selling prices, increased unit sales volumes of printwear fashion and performance products, and favorable product mix. These positive factors were partly offset by lower net sales volumes of printwear basics and branded apparel, particularly lower sock sales, as well as the planned exit of private label programs and the impact of unfavorable foreign exchange.