Gildan Posts Double-Digit Growth

Gildan Activewear (asi/56842) reported it generated $2.5 billion in consolidated net sales in 2015, up 11.7% from $2.2 billion in 2014. The supplier’s printwear sales grew to 12.1% and its branded apparel sales climbed 11.1%. Net earnings for the year were $3.4 billion, an increase of 25.1% from $2.7 billion in the prior year. Adjusted diluted earnings per share for the year was $1.46. 

For the fourth quarter, consolidated net sales were $543.8 million, an increase of 39.2% from $390.6 million in the same quarter of 2014. Q4 net earnings were $67.6 million compared to a net loss of $41.2 million in the same quarter last year (the latter caused by discounting of printwear inventory). Printwear sales, excluding the $48 million devaluation, jumped 37% to $285 million compared to $160 million. Growth was spurred by an increase in sales volume in the U.S., Canada and internationally, as well as the acquisition of Comfort Colors.

 “Point of sales from U.S. distributors to screen printers remained strong in the quarter, particularly in the T-shirt category,” said EVP, CFO and Chief Administrative Officer Rod Harries in a conference call. “Volume growth also reflected lower seasonal distributor destocking compared to the same quarter last year.”

Branded apparel sales in the fourth quarter were $258.9 million, up 12.4% from $230.3 million in the same quarter last year. The increase in branded apparel sales reflected an 85% sales increase in Gildan branded products. Underwear sales grew 21% due to the company doubling its retail door count to 18,000.

Gildan’s board of directors has approved the purchase of up to 12.2 million shares, representing approximately 5% of the company’s issued and outstanding common shares. Gildan has already announced it intends to buy back 4 million shares through private agreements before the cutoff of February 25, 2017. 

In its full year-outlook, the company says it expects consolidated net sales growth of 4% for 2016. Printwear sales are projected to be in excess of $1.6 billion (roughly flat), and branded apparel sales are projected to be in excess of $1 billion (over 7% growth). In its earnings statement, Gildan said it would continue to lower printwear net selling prices across basics, fashion basics and performance categories to drive penetration and growth. The company is anticipating an increase of 20% in printwear sales to international markets. Overall, Gildan projects an adjusted EPS of $1.50-$1.60, boosted by sales volume growth in both segments, as well as lower cotton costs and manufacturing cost savings from the company’s investments.

“We continue to feel very good about our prospects and the plans we’re putting in place to position the company to drive future long-term growth and strong shareholder returns,” Harries said. “While we’re dealing with near-term headwinds, our growth drivers remain intact.”