Gildan reports drop in Q1 sales and earnings

For its first quarter, Gildan Activewear Inc. reported GAAP diluted EPS of 11 cents, and adjusted diluted EPS of 16 cents. The company said, as expected, earnings were down for the quarter versus last year due to the impact on sales from lower levels of distributor restocking and higher raw material and other input cost pressures. In addition, the earnings decline reflected a 12 cents per share trade accounts receivable impairment charge primarily related to the wind down of the Heritage Sportswear operations.

During the first quarter, the company’s sales of 623.9 million dollars, were down 3.6 percent compared to the prior year quarter reflecting declines of 4.1 percent in activewear and 1.8 percent in the hosiery and underwear category. The company added that the decline in activewear, where it generated 493.6 million dollars in sales for the quarter, was primarily due to lower levels of distributor restocking of imprintables compared to the level of restocking that occurred in the first quarter last year in advance of the price increase implemented in March 2018.

These factors, Gildan added, were partly offset by double digit growth in fleece shipments, which drove more favourable product-mix, and the impact of higher net selling prices. The slight sales decline in the hosiery and underwear category, where the company reported 130.4 million dollars in overall sales, was mainly attributable to lower Gildan branded socks and underwear sales in the mass retail channel, which was largely offset by higher socks sales of licensed and global lifestyle brands compared to last year as well as the benefit of earlier than anticipated shipments of a new private label men's underwear program in the mass channel, for which initial shipments began towards the end of the first quarter.

Gross margin of 25.8 percent was down 140 basis points over the same period last year. Net earnings for the three months ended March 31, 2019 amounted to 22.7 million dollars or 11 cents per share on a diluted basis, compared with 67.9 million dollars or 31 cents per share on a diluted basis, for the same period last year. Excluding the impact of after-tax restructuring and acquisition-related costs in both years, Gildan reported adjusted net earnings of 32.8 million dollars or 16 cents per share on a diluted basis, down from 74.6 million dollars or 34 cents per share on a diluted basis in the first quarter of 2018.

Gildan updates outlook for 2019

The company is now projecting 2019 GAAP diluted EPS of 1.75 dollars to 1.85 dollars and adjusted diluted EPS of 1.90 dollars to 2 dollars, on projected sales growth in the mid-single-digit range. The GAAP EPS range compares to its previous guidance of 1.80 dollars to 1.90 dollars, which reflected previously projected restructuring and acquisition-related costs of approximately 20 million dollars. Adjusted EBITDA is now projected to be in excess of 605 million dollars compared to in excess of 630 million dollars previously.

The company’s board of directors has declared a cash dividend of 134 cents per share, payable on June 10, 2019 to shareholders of record on May 16, 2019.

Picture:Facebook/Gildan