Sales Up In Gildan’s First-Quarter Financial Report
Supplier Gildan Activewear (PPAI 250187, S13) has released results for its fiscal first quarter 2021, which ended April 4. The Montreal, Quebec-headquartered company reports that its "Back to Basics" program has driven a strong performance in the quarter and sales of $590 million are up 28 percent over the prior year.
“Our first-quarter results reflected a strong start to 2021 as continued benefits from our Back to Basics strategy supported sell-through across all channels and drove strong operating margin performance, allowing us to deliver net earnings significantly above prior year and first quarter 2019 levels,” says Gildan President and CEO Glenn J. Chamandy. “While large events have not yet restarted, we continue to be encouraged by the strength of our imprintables business, and on the retail side, we were pleased with strong double-digit growth in underwear and activewear sales compared to the first quarters of 2020 and 2019.”
Overall, the company generated $590 million in sales, up 28 percent over last year and down approximately five percent from the first quarter of 2019. Gross margin in the quarter of 32 percent and adjusted gross margin of 31.1 percent were up 880 basis points (bps) and 650 bps, respectively, over the same quarter last year. Margin performance in the quarter benefited from the positive impact of an approximate $18 million accrual of a one-time payment from the USDA related to its Pandemic Assistance for Cotton Users (PACU) program. During the first quarter, Gildan generated strong free cash flow of $38 million and its available liquidity position at the end of the quarter remained at $1.6 billion. Net debt totaled $541.6 million. Furthermore, the company repaid a $400 million unsecured two-year term loan which was due on April 6, 2022.
The first quarter’s $589.6 million in net sales consisted of activewear sales of $484.6 million, up 30.1 percent, and sales of $105 million in the hosiery and underwear category, up 21.4 percent. The increase in activewear sales was driven by double-digit unit sales volume growth in North American and international imprintables markets and activewear sold in retail channels, as well as favorable product-mix, partly offset by lower net selling prices. Imprintables volume growth reflected the impact of net restocking by distributors and positive point-of-sales (POS) compared to the first quarter last year.
Gildan generated operating income of $113.8 million, or 19.3 percent of sales, in the first quarter of 2021 compared to an operating loss of $92.3 million last year. Adjusted operating income totaled $110.3 million, or 18.7 percent of sales, compared to $19.9 million, or 4.3 percent of sales, last year, driven by the impact of higher sales and adjusted gross margin and the benefit of the non-recurrence of the impairment of trade accounts receivable of $20.8 million recorded in the first quarter of 2020.