Gildan revenue growth eroded by Hurricane Florence

Montreal, Canada-based basics manufacturer and owner of American Apparel, Gildan Activewear Inc., announced a 5.3% increase in third-quarter net sales on Thursday, driven by strong growth in international activewear but dampened by disruption caused by Hurricane Florence.
 

Gildan saw strong growth in activewear sales in Q3 but lower-than-expected revenues in its underwear and hosiery category - Instagram: @americanapparel

The company’s net sales totaled $754.4 million in the third quarter ended September 30, 2018. This reflected a 12.1% increase in activewear sales, which came to $612.4 million, partly offset by a 16.6% decline in hosiery and underwear that was largely related to lower unit sales of socks.  Activewear saw particularly strong growth in international sales, which increased 27.6%.
 
Overall revenues were also negatively affected by Hurricane Florence, which led to shipping limitations in September that impacted sales by around $30 million.
 
Operating income for the quarter totaled $127.6 million, a $2.7 million increase compared to the prior-year period, while net earnings fell to $114.3 million, compared to $116.1 million. However, the company’s adjusted net earnings, which exclude the impact of after-tax restructuring and acquisition-related costs, were $118.1 million, essentially flat when compared to the same period in the previous year.
 
Year-to-date sales increased 3.3% to $2.17 billion, pushed by an 11% increase in activewear but pulled down by a 20.4% decrease in hosiery and underwear, while net earnings for the period totaled $291.2 million.
 
The company continues to expect to see sales growth in the mid-single-digit range in its full-year 2018 results, driven by double-digit growth in activewear.
 
However, due to disruption caused by Hurricane Florence and lower-than-anticipated licensed brand sock sales, revenues in the hosiery and underwear category are now expected to decline by approximately $125 million, rather than the previously reported $85 million.

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