Gildan Announces Third-Quarter Results

Gildan Activewear (asi/56842) has reported increased sales and earnings for the third quarter of 2015. The Montreal-based apparel supplier and manufacturer said net sales reached $674.5 million, up from $666 million during the same quarter the prior year. Quarterly net earnings tallied $123.1 million, or $0.50 per share – an increase over 2014’s $122.7 million. Before reflecting restructuring and acquisition-related costs, net earnings were $126.4 million, or $0.52 per share – up 2.9% and 4%, respectively, from the comparable quarter a year earlier.

In the company’s Printwear segment, which includes business in the promotional products industry, quarterly net sales amounted to $440.5 million, up $4.7 million (an increase of 1.1%) from the corresponding period in 2014. In its earnings release, the company attributed its Printwear segment increases to unit volume growth in both the U.S. and international markets (including 13% growth for the latter) as well as the company’s acquisition of Comfort Colors earlier this year, “which continued to perform strongly” the company  noted. U.S. growth was fueled by “the benefit of the pricing actions taken in December 2014 and continued penetration in the high-valued, higher growth fashion basics and performance segments.”

The company’s operating income in Printwear increased 4.6% to $124.4 million. Margins rose to 28.2%, an uptick from 27.3% in 2014, due to more favorable manufacturing and cotton costs that offset lower pricing and the negative impact of international currencies compared to the dollar.

In this year’s third quarter, Gildan also increased sales in its Branded Apparel segment. However, CEO Glenn Chamandy said that sales were about $15 million less than anticipated, primarily because Walmart was not restocking Gildan items fast enough at its U.S. stores, resulting in consumers turning to other brands. "They can't get enough goods from the back [storage] to fill the demand of our product in the [display] space that's available to us today," Chamandy said last week during a call about third-quarter results. "Therefore, if the consumer wants to buy something, he's not buying our product." Quarterly sales in the segment reached $234 million, a rise of 1.7% from the same quarter in 2014.

Going forward, Gildan projects full-year earnings-per-share to be in the $1.46 to $1.48 range on projected sales of about $2.55 billion.