Gildan Announces First Quarter 2012 Results, Reports Second Quarterly Loss in Company History

Apparel manufacturer Gildan Activewear, headquartered in Montreal, revealed Wednesday that the company had a net loss of $46.1 million, or $0.38 per share, for the first quarter of 2012. The drop, which was anticipated in last year's fourth-quarter announcement, is only the second quarterly loss since the company went public and began reporting results in 2012.

As reported in December, company chief financial officer Laurence Sellyn expected to see profits and stock dip in the first quarter due to price cuts aimed at offloading product manufactured from cotton purchased at record $2 highs last year. The company had locked in contracts when cotton prices skyrocketed, and was forced to continue purchasing at the higher rate when prices dropped until the contracts expired.

"Our average cotton cost during the quarter was slightly more than double our cost of cotton in the first quarter of last year," Sellyn explained. The company saw net earnings of $35.9 million for the same quarter in 2011.

The quarterly report marked the first time the company has reported its results as two separate operating segments, printwear and branded apparel. The printwear segment serves the promotional and screen printing market, while the branded apparel group focuses on the company's retail customers.

Net sales for the first quarter were reported at $303.8 million, down 8.3 percent from 2011. Of that, the printwear segment accounted for $147.2 million, down 41.1 percent, while the branded apparel segment sales were $156.6 million, up 92.7 percent.

The company lost $30.8 million on the $147.2 million in printwear sales, compared to a profit of $62.8 million on $156.6 million in sales for the same period last year. That decline in profitability was due primarily to one-time price cuts for wholesale customers, as well as the higher cotton costs and a manufacturing shutdown in December.

Gildan Activewear's jump in branded apparel was mostly attributed to the acquisition of the Gold Toe Moretz sock company in April 2011, which made the company the world's largest sock producer. The branded segment earned $2.4 million in profit on $156.6 million in sales.

Gildan Activewear reported to investors that, despite the quarterly decline, the company still anticipated full-year sales of $1.9 billion, with the printwear segment accounting for $1.3 billion and branded apparel for $600 million.

To see the full report, download a PDF of the first quarter results at Gildan Activewear's website.