Gildan Makes Acquisition, Announces Quarterly Financials
Paying Cash For Northfield, VT-Based Company
Apparel supplier Gildan Activewear (asi/56842) is gearing up to expand into the growing fashion basics market with a $100 million acquisition of Comfort Colors. Gildan, which is based in Montreal, announced last week that it had signed a definitive agreement to acquire substantially all of the assets of Comfort Colors, a supplier of garment-dyed undecorated basic T-shirts and sweatshirts.
Gildan is paying cash for the Northfield, VT-based company, financing the deal from its bank credit facility. Subject to customary closing conditions, the acquisition is expected to be completed by the end of the first quarter. Gildan anticipates that adding Comfort Colors to its arsenal will help drive growth in the fashion basics niche of the North American printwear market. Comfort Colors is a popular brand among consumers purchasing from college bookstores, specialty retail stores, and resort shops. The apparel provider is known for treating garments through a customized in-house dyeing process that gives the shirts a worn appearance and a soft feel. Last year, Comfort Colors generated net sales of approximately $95 million.
Meanwhile, Gildan also announced results for its fourth quarter, which ended January 4. The company reported a net loss of $41.2 million, or $0.34 per share on a diluted basis. Consolidated net sales for the quarter reached $390.6 million, down 13.5% from $451.4 million during the same period the prior year. Weaker printwear sales – down to $160.3 million for the quarter from the prior year’s $261.8 million – played a significant factor in the overall drop.
“The decline in the company's sales and earnings compared to last year was primarily due to the impact in the quarter of the strategic pricing actions in printwear, which the company announced on December 3, 2014 in order to reinforce its leadership position in the industry,” Gildan said in a statement. “The company lowered base selling prices significantly and reduced and simplified its discount structure, in order to be responsive to distributors and enhance their ability and visibility to plan their business, and position the company to drive unit sales volume and earnings growth in calendar 2015 and beyond.”
For 2015, Gildan projects consolidated net sales to top $2.65 billion. Printwear sales are expected to increase 12% compared to the company’s calendar 2014, while sales revenues for branded apparel are expected to jump 23%. To help fuel growth this year, Gildan recently struck an agreement with country singer Blake Shelton, who will promote the brand.