Gildan Sales Climb 13.7 Percent In 2018’s Fourth Quarter
Gildan Activewear has released its fourth quarter and full-year 2018 financial results, noting that the Montreal, Quebec-based supplier reported net sales of approximately $2.9 billion in 2018—up 5.7 percent over 2017—and a 13.7 percent of net sales in fourth quarter, year-over-year, of $742.7 million.
The company’s 2018 sales growth reflected a 13.6 percent increase in activewear sales, partly offset by a 17 percent decline in the hosiery and underwear category. The increase in activewear sales was driven by higher unit sales volume and net selling prices, more favorable product mix and positive foreign exchange impacts compared to the prior year. Activewear unit volume growth was mainly due to higher shipments of imprintable products in the U.S., including fashion basics and fleece products, combined with strong unit sales volume growth in international markets and higher unit sales of global lifestyle brand products. The decline in the hosiery and underwear category was mainly due to lower sock volumes in the mass market channel, particularly as a result of the shift to private label brands by mass retailers, as well as declines in licensed and Gold Toe brand sales.
Gildan’s fourth quarter sales growth was driven by a 22.3 percent increase in activewear sales, although this was partly offset by a 7.9 percent decline in the hosiery and underwear category. Similar to the segment’s full-year performance, the increase in the activewear category in the quarter, where it generated $569 million in net sales, was mainly due to higher unit sales volumes, a better product-mix driven primarily by higher fleece shipments, and higher net selling prices. Activewear volume growth reflected higher shipments of imprintable products in North America and a 29 percent increase in international shipments, as well as higher sales to global lifestyle brands and retailers. Sales in the hosiery and underwear category totaled $173 million down $15 million from the fourth quarter last year primarily due to lower Gildan sock sales in mass and lower mass retailer replenishment of Gildan underwear in the quarter, which was partly offset by shipments under one of the company’s new private label underwear programs in the fourth quarter.
The company incurred $21.7 million and $34.2 million of restructuring and acquisition-related costs in the fourth quarter of 2018 and for the full year, respectively. These costs primarily related to Gildan’s organizational realignment and the consolidation of textile and sock manufacturing, warehouse distribution and garment dyeing operations. Restructuring and acquisition-related costs for 2018 were initially projected to be in the range of $15 to $20 million. The higher than previously anticipated restructuring and acquisition-related costs were largely associated with the consolidation of textile manufacturing and sock production capacity, as well as the closure of an additional distribution facility in North Carolina.
Looking ahead, Gildan projects Adjusted EBITDA for 2019 to be in excess of $630 million and it expects to generate approximately $350 to $400 million in free cash flow for 2019. Sales growth in 2019 is expected to be driven by higher sales volume in key growth areas, including fashion basics, international markets, global lifestyle brands and strong underwear growth. Projected sales growth also assumes the benefit of favorable product-mix and selling price increases to cover higher raw material and other input costs. The positive impact of these factors on sales are expected to be partly offset by anticipated lower sales of activewear basics and socks, as well as an unfavorable impact of foreign exchange.