Gildan Activewear slashes full-year guidance after disappointing preliminary Q3 results
Canadian apparel manufacturer Gildan Activewear Inc. has announced a significant cut to its full-year financial guidance, following a $50 million sales shortfall in its preliminary results for the third quarter due to weak demand for imprintables in North America.
For the third quarter ended September 29, 2019, Gildan currently expects to report a 7% decrease in both diluted earnings per share (EPS) and adjusted diluted EPS, which are predicted to total $0.51 and $0.53, respectively.
Quarterly sales are expected to be around $740 million, reflecting a 2% decrease year over year. The company’s activewear category accounts for around $620 million of this total, with the remaining $120 million coming from hosiery and underwear.
In line with the Montreal-based owner of American Apparel’s previously reported guidance, adjusted diluted EPS had been expected to remain flat in Q3, while sales were predicted to grow in the mid-single-digits.
According to a release from the company, Gildan’s disappointing performance in the third quarter reflects much lower than expected demand for imprintables in North America, with particular weakness seen in the U.S., where the channel had been expected to post low-single-digit growth in distributor point-of-sales, but actually reported a high-single-digit decline.
Imprintable sales were also more stagnant than anticipated internationally, with softness in both Europe and China. Outside of the imprintables channel, the company’s retail sales were largely in line with its expectations.
As a result of its weaker than expected sales and earnings, Gildan has revised down its full-year 2019 guidance. The company now expects sales to decrease in the low-single-digits compared to the prior year, while diluted EPS is projected to be in the range of $1.50 to $1.55.
Gildan’s previously reported guidance projected mid-single-digit sales growth and diluted EPS in the range of $1.80 to $1.85.
Adjusted diluted EPS is now anticipated to be between $1.65 and $1.70, compared to a previous guidance of between $1.95 and $2.00.
As well as American Apparel, Gildan also owns its namesake basics label, Comfort Colors and Anvil, among other brands.
The company’s stock plunged more than 25% in Friday trading following the announcement of its newly reduced guidance.
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