Gildan slides into loss due to coronavirus
Gildan Activewear Inc., the Montreal-based owner of brands including Gildan and American Apparel, announced a Q1 loss of $99.3 million, or $0.50 per diluted share, on Wednesday, down from net earnings of $22.7 million, or $0.11 per diluted share in the prior-year period, as disruption related to the Covid-19 pandemic negatively affected the company’s sales.
For the first quarter ended March 29, 2020, Gildan’s total sales came to $459.1 million, declining 26.4% compared to $623.9 million in the same period in the previous year. Sales fell 24.5% to $372.6 million in the company’s activewear segment, and 33.7% to $86.5 million in the hosiery and underwear category.
Gildan said that it had been expecting a downturn in first-quarter sales, but that, due to the current global health crisis, declines were substantially larger than anticipated.
“During the first quarter, we faced unprecedented impacts globally as the Covid-19 pandemic unfolded,” commented Gildan president and CEO Glenn Chamandy in a release. “This required us to amplify our focus on what we do best and on what we can do to support all our stakeholders as a values-driven, strong, resilient, and well-positioned company.”
In order to counteract the negative impact of the coronavirus, Gildan has implemented a number of initiatives over the last few weeks. The company has suspended its quarterly cash dividend and share repurchases, drawn down funds under its long-term bank credit facility and cut the salaries of senior staff by between 25% and 35%.
Since March 30, Chamandy, along with the company’s executive vice presidents and board of directors, have foregone 50% of their salaries.
In light of the uncertainty related to the coronavirus crisis, Gildan withdrew its financial guidance at the end of March. The company now expects to report a “a significant earnings loss in the second quarter.”
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