Gildan Activewear Announces 2015 Third Calendar Quarter Results
Gildan Activewear, Montreal, Quebec, Canada, recently announced its results for the three months ended Oct. 4, 2015, and updated its sales and earnings guidance for calendar year 2015.
Adjusted diluted earnings-per-share (EPS) for the third calendar quarter was in line with the company’s previous guidance. Results for the fourth calendar quarter are expected to be significantly in excess of earnings in the fourth calendar quarter of any previous year, as the company benefits from manufacturing cost reductions from its capital expenditure programs and lower cotton costs, combined with continuing top-line growth in sales revenues in both operating segments.
The company reported net earnings of $123.1 million, or $0.50 per share on a diluted basis, for the three months ended Oct. 4, 2015, on consolidated net sales of $674.5 million. This compares with net earnings of $122.7 million, or $0.50 per share on a diluted basis, on consolidated sales of $666 million for the three months ended Oct. 5, 2014.
Before reflecting, restructuring and acquisition-related costs of approximately $3.3 million after-tax in the quarter relating primarily to the integration of acquisitions, Gildan Activewear reported adjusted net earnings of $126.4 million, or $0.52 per share on a diluted basis, for the three months ended Oct. 4, 2015, up 2.9 percent and 4 percent, respectively, compared with adjusted net earnings of $122.8 million, or $0.50 per share on a diluted basis, for the same period last year.
Gildan Activewear resumed a trajectory of EPS growth in the third calendar quarter of 2015, after three quarters in which results were negatively impacted by the misalignment in the timing of lower printwear selling prices, and the benefit of lower manufacturing and cotton costs. The improved earnings performance in the third quarter reflected unit sales-volume growth and operating margin expansion.
During the quarter, the company benefited from lower manufacturing costs due to savings from its investments in yarn spinning and other capital projects, lower cotton and purchased input costs, and the non-recurrence of the transitional manufacturing costs, which were incurred in 2014. Overall, higher unit sales-volumes and lower manufacturing costs in the quarter more than offset lower net selling prices and unfavorable product mix for printwear, due to the later timing of fleece shipments, and increases in selling, general and administrative, financial and income tax expenses. Consolidated net sales in the quarter were below the company’s guidance for net sales of close to $700 million, mainly as a result of lower-than-anticipated branded apparel sales, which were impacted by continuing lower-than-anticipated inventory replenishment by a major U.S. retail customer and weaker-than-anticipated demand during the back-to-school period.
Adjusted diluted EPS for the third calendar quarter of 2015 were within the company’s guidance range of adjusted diluted EPS of $0.51 to $0.53, which it provided on July 31, 2015, as the impact of lower-than-anticipated branded apparel sales was offset mainly by higher-than-projected net selling prices and more favorable product mix for printwear for the quarter compared to the company’s previous projection.