Gildan Announces Record Second Quarter Results, Report Suggests Company May Shift Away from Private Label
Gildan Activewear, the Canadian apparel manufacturer, has reported record results of the second quarter of 2013. As a result of the increase in earnings, the company also raised its full-year guidance.
Net earnings for the period ended March 31 were $72.3 million, more than double the $26.9 million earned in the same period of 2012, a result of reduced cotton costs, the acquisition of Anvil Knitwear, and lower-than-expected discounting in the printwear sector, which sells to the promotional products industry.
Net sales for the quarter were $523 million, up 8.4 percent from $482.6 million. Of that, $368 million was sold through the company's printwear business, up from $360.9 million. Gildan Activewear's other segment, branded apparel, saw sales of $155 million, up 27.4 percent from $121.7 million in the second quarter of 2012. The May 2012 purchase of Anvil Knitwear was cited as one reason for both increases.
According to a Reuters article, Gildan Activewear has been adjusting its focus away from the private label industry, with increased emphasis placed on its branded apparel sales. "The company, which holds the U.S. sock licenses for Under Armour Inc. and New Balance, has been shifting away from the private label business, spending more to market its own brands such as Gildan and Gold Toe," the article said.
Statements in the company's earnings report could supports this: "the company is continuing to invest in manufacturing cost reduction projects and increased vertical integration, and also expects to leverage the investment which it has made in building an overhead infrastructure to drive the further development of its branded apparel business," the release said.
In addition, Gildan Activewear's press release said that it has discontinued several items from Anvil's product line and is refocusing the brand "on contemporary ring-spun products." The second quarter earnings report also states that Anvil Knitwear's Honduras facility is being upgraded to produce "more specialized performance products."
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