Gildan Reports Strong Q1 Sales

Montreal-based Gildan Activewear (asi/56842) reported its net sales reached $665 million for the first quarter of 2017, up 12% from the same quarter last year. The apparel manufacturer said its printwear sales totaled $446 million and were up 14% versus Q1 of 2016, while its branded apparel sales grew 9.2% year-over-year, reaching a total of $220 million.

“Operationally, we continue to make good progress on our strategic initiatives, capturing printwear growth in the fashion basics and performance categories, gaining share in retail, improving our operating profitability in branded apparel, and progressing well on the integration of our acquisitions, which will enhance our growth and competitive positioning over the long-term,” said Rhodri Harries, Gildan’s executive vice president and chief financial and administrative officer, in an earnings call.

“So, despite an environment where we continue to see mixed market conditions, including the impact of store closings, we believe our performance during the first quarter positions us well to deliver on our previous guidance for the full year.”

Gildan attributed the printwear segment’s growth to a $40 million sales contribution from its acquisitions of Alstyle Apparel (asi/34817) last May and American Apparel this past February, as well as continued growth in international markets, particularly in Asia.

The company attributed its branded apparel segment’s growth to a $21 million sales contribution from its acquisition of Montreal-based Peds Legwear Inc. last August. The increase was partially offset by the impact from the planned exit of certain private label programs for about $7 million.

Glenn Chamandy, Gildan Activewear president and CEO, said the company expects to see the impact of the American Apparel acquisition in the fourth quarter of 2017 and into 2018. “Our made-in-the-USA supply chain is in place and we’ve started to ramp-up production across our manufacturing system to support overall demand,” Chamandy said. “On the front end, we have integrated all the order to cash distribution and marketing functions to support our American Apparel Printwear business, and we are in the process of assessing how to leverage this brand in e-commerce and retail.”

Gildan reaffirmed its full-year guidance of adjusted diluted EPS in the range of $1.60-$1.70 on expected consolidated net sales growth in the high single-digit range. The company continues to expect earnings growth in 2017 to be weighted in the first half of the year as higher raw material costs are projected in the second half of the year.

Gildan said its printwear and branded apparel net sales are each expected to increase in the high single-digit range driven by organic growth and the projected aggregate impact of approximately $160 million to $185 million from the acquisitions of Alstyle, Peds and American Apparel.