Gildan Activewear posts declines in sales and earnings on weak imprintables channel
Gildan Activewear, Inc., the Montreal-based owner of American Apparel, announced dips in its third-quarter revenues and earnings on Thursday, due to weak sales in the company’s imprintables channel and declines in its hosiery and underwear category.
In line with the figures released by the company earlier in October, Gildan’s overall net sales for the quarter ended September 29, 2019, fell 1.9% to $739.7 million, down from $754.4 million in the prior-year period.
The company’s activewear sales crept up 1.1% to $619.2 million, but were offset by a 15.1% decrease in the hosiery and underwear category, where sales were $120.5 million.
The declines in the hosiery and underwear category were driven mainly by lower sock sales, while the softness of the activewear segment reflected lower sales of imprintable basics, both in North America and internationally.
Gildan’s quarterly net earnings came to $104.9 million, or $0.51 per diluted share, falling 7% from the $114.3 million, or $0.55 per share on a diluted basis, reported by the company in the same period in the previous year.
Year to date, Gildan’s net sales remained flat at $2.2 billion, while net earnings totaled $227.3 million, or $1.11 per diluted share, falling from $291.2 million, or $1.37 per diluted share, in the first nine months of 2018.
In light of its disappointing results, Gildan sought to reassure investors in the earnings release it published on Thursday.
“While weaker imprintables order flow in North America and ongoing softness in international imprintables markets is currently dampening sales and earnings growth in 2019, we do not believe this reflects a structural change to our business as a leading supplier of basic replenishment apparel driven by our large scale, low-cost vertically-integrated manufacturing system,” explained the company.
Gildan also revealed that it has decided to move forward with plans to close its textile and sewing operations in Mexico and relocate their equipment to its facilities in Central America and the Caribbean Basin.
Further to this, the company stated that it is in the process of assessing a range of other cost-cutting measures, including the possibility of fully phasing out its direct ship-to-the-piece imprintables business, a move which would allow the group to focus on its distributor business.
Looking to the end of the year, Gildan now expects to see annual sales decline in the low single digits, while diluted EPS is forecast to be in the range of $1.43 to $1.48, revised down from a previous estimate of between $1.50 and $1.55.
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