Aug 6, 2022
Gildan Activewear sees sales of $896m in Q2
Aug 6, 2022
Canadian clothing manufacturer Gildan Activewear Inc. has generated sales of $896 million during the second quarter of 2022, which is up 20 per cent over the prior year. It maintained strong gross margin and SG&A performance, delivering an operating margin of 19.4 per cent, and adjusted operating margin of 19.6 per cent in a continued environment of inflationary cost pressure, down only 30 basis points over last year.
“We are pleased with our record sales and earnings for the quarter, underpinned by the Gildan sustainable growth strategy, including our focus on innovation and ESG,” said Glenn J. Chamandy, Gildan president and CEO. “Furthermore, our first half performance points to the tight control we currently have over our supply chain and cost structure, which puts us in a good position to support our customers' demand as we move through the remainder of the year.”
Gildan Activewear delivered record GAAP diluted EPS of $0.85 and adjusted diluted EPS of $0.86, up 15 per cent and 27 per cent, respectively, compared to the second quarter of 2021. Cash generated from operating activities in the quarter totalled $210 million and after capex investments of approximately $50 million, the company delivered $159 million of free cash flow.
The apparel maker ended the quarter with a total debt position of $922 million, while net debt increased slightly to $848 million, bringing the net debt leverage ratio to 1.1, at the low end of the company's target range, as per the release.
Sales for the second quarter ending July 3, of $896 million, were up 20 per cent over the prior year, consisting of activewear sales of $758 million, up 27 per cent and sales in the hosiery and underwear category of $138 million, down 8 per cent over the prior year. The activewear sales increase was due to higher net selling prices, which reflected base price increases and lower promotional discounting this year, as well as favourable product-mix, and higher activewear shipments in North America. These positive factors were partly offset by lower international shipments due to demand weakness in Asia.
In the hosiery and underwear category, the sales decline was driven by lower unit sales due to softening demand in retail, as well as the impact of the non-recurrence of stimulus payments that positively impacted demand for these categories in the prior year.
During the second quarter, the company generated gross and adjusted gross profit of $265 million, compared to gross profit of $241 million and adjusted gross profit of $228 million in the prior year quarter. The improvement was mainly driven by the strong growth in net sales.
Gildan generated operating income of $174 million, or 19.4 per cent of sales in the quarter and adjusted operating income of $176 million, or 19.6 per cent of sales compared to operating income of $160 million, or 21.4 per cent of sales, and $149 million, or 19.9 per cent of sales, on an adjusted basis last year.
The manufacturer reported net earnings of $158 million and $160 million on an adjusted basis, up 8 per cent and 18 per cent, respectively, compared to last year.
It remains positive moving forward and confident about its ability to deliver on its three-year objectives announced earlier this year.
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