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Gildan lowers full year outlook on weak Q3 results

By Prachi Singh

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Business

Gildan Activewear Inc. expects to report GAAP diluted earnings per share for the third quarter ended September 29, 2019 of approximately 51 cents and adjusted diluted EPS of approximately 53 cents, both down 7 percent over the third quarter of 2018 compared to previous guidance of flat EPS growth. The company said in a statement that sales for the quarter are expected to be approximately 740 million dollars, down 2 percent over the same quarter last year, reflecting estimated activewear sales of 620 million dollars and sales of 120 million dollars in the hosiery and underwear category. Gildan had earlier projected sales growth in the mid-single-digit range for the third quarter.

The company added that during the third quarter of 2019, it experienced significantly weaker than expected demand for imprintables in North America and ongoing softness in international imprintable markets. Specifically in the U.S. imprintables channel, where the company was expecting low-single-digit growth in distributor point-of-sales (POS), actual POS during the third quarter was down high-single-digits compared to last year. Further, in international imprintable markets, where the company was forecasting growth, continued softness in Europe and China resulted in lower international sales for the quarter compared to last year.

Gildan lowers full year sales and EPS outlook on softer demand

After announcing the revised lower outlook for the third quarter, Gildan is revising its 2019 guidance to reflect the approximate 50 million dollars sales shortfall in the third quarter and is assuming the current demand weakness for imprintables both in North America and internationally will persist through the fourth quarter. In addition, given the current downturn in demand, the company is now projecting significantly lower year-end distributor inventory levels than previously projected. The company estimates that lower demand expectations than previously projected will reduce the company’s sales projection for the fourth quarter by approximately 70 million dollars and anticipates distributor inventory destocking will negatively impact sales by approximately 100 million dollars.

The company is now expecting full year sales to be down low-single-digits compared to 2018 and GAAP diluted EPS is projected to be 1.50 dollars to 1.55 dollars and adjusted diluted EPS is now expected to be in the range of 1.65 dollars to 1.70 dollars compared to previous guidance of mid-single-digit sales growth for 2019, GAAP diluted EPS of 1.80 dollars to 1.85 dollars and adjusted diluted EPS of 1.95 dollars to 2 dollars. Adjusted EBITDA for the full year is now expected to be in the range of 545 to 555 million dollars, compared to previous guidance of in excess of 615 million dollars.

Picture:Facebook/Gildan

Gildan Activewear