Gildan Activewear posts sales rise, cuts outlook

Net sales for the third quarter at Gildan Activerwear came in at 870 million dollars, up 2 percent over the prior year, consisting of activewear sales of 744 million dollars and sales in the hosiery and underwear category of 126 million dollars.

Revising its guidance, the company said, it expects revenues for the full year at the lower end of the range provided on August 3 of flat to down low single digits, adjusted operating margin slightly below the low end of current 18 percent to 20 percent annual target range and adjusted diluted EPS at the lower end of range 2.55 dollars to 2.65 dollars.

The company’s board of directors has declared a cash dividend of 0.186 cents per share, payable on December 18, 2023 to shareholders of record as of November 22, 2023.

"Our competitive position remains very strong in a challenging environment driven by our industry-leading vertically integrated manufacturing platform. We delivered third quarter performance which came in overall in line with our expectations. We resumed our sales growth trajectory and delivered operating margin within our target range” said Glenn J. Chamandy, Gildan’s President and CEO.

Gildan witnesses growth across core categories

International markets remained particularly challenging, with sales down 23 percent during the quarter as a result of lower demand and price pressures across all markets.

The hosiery and underwear category sales were up 16 percent driven by sales volume growth, reflecting the expansion of private label offering and the roll-out of new underwear programs in the mass retail channel, as well as strength in hosiery. Men's underwear and socks also witnessed positive growth.

Gildan generated gross profit of 239 million dollars or 27.5 percent of sales in the third quarter, down 13 million dollars and 220 basis points respectively.

The company saw a sequential improvement of 170 basis points to gross margin and generated operating income of 155 million dollars or 17.8 percent of sales and adjusted operating income of 157 million dollars or 18.1 percent of sales, down respectively 270 and 190 basis points.

Gildan net sales drop 4 percent in the nine month period

Net sales for the nine months were 2,413 million dollars, down 4 percent over the same period last year, reflecting a decrease of 7 percent in activewear sales, partly offset by an increase of 10 percent in the hosiery and underwear category.

International sales of 172 million dollars were down 14 percent.

The company added that the strong performance in the hosiery and underwear category, with sales of 389 million dollars in the first nine months, was driven by both underwear and sock volume growth.

Gildan generated gross profit of 644 million dollars in the first nine months, down 114 million dollars. Gross margin of 26.7 percent was down by 340 basis points, while operating income was 466 million dollars or 19.3 percent and adjusted operating income was 398 million dollars or 16.5 percent of sales, down 105 million dollars or 350 basis points.

Gildan appoints new board member

Gildan has also announced the appointment of Sharon Driscoll to the company’s board of directors, bringing the company’s Board to eleven members.

Driscoll, the company said, will serve on the board’s audit and finance committee and compensation and human resources committee.

“Sharon is an accomplished business leader and her 15 plus years of C-suite experience across finance and strategy in publicly traded and privately held retail and distribution environments make her an ideal addition to our board,” said Gildan’s board chairman, Donald C. Berg in a statement.

Driscoll is a corporate director and currently serves on the board of Empire Company Limited and Imperial Oil Limited. Until her retirement in September 2023, she held executive positions at RB Global Inc., including chief financial officer, co-chief executive officer and advisor to the CEO.

Previously, she held other senior executive positions including CFO at Katz Group Canada Limited, CFO at Sears Canada Inc., and executive finance leadership roles at Loblaw Companies Limited.