Gildan Activewear sales, profits dip; announces expansion initiative
Despite declining sales and earnings in the first quarter, Montreal-based apparel manufacturer Gildan Activewear is making expansion plans that will include a new manufacturing facility.
For the three months ending March 31, the maker of underwear and t-shirts reported net income of $22.7 million, or 11 cents per share on a diluted basis, from $67.9 million, or 31 cents per share on a diluted basis, reported the same period last year.
The company said adjusted earnings in the first quarter were $32.8 million, or 16 cents per share on a diluted basis, down from $74.6 million, or 34 cents per share on a diluted basis in the first quarter of 2018 mainly due to the decline in operating income and higher net financial expenses.
Sales of $623.9 million, 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.
Activewear generated $493.6 million in sales for the quarter, but was still down compared to last year due to lower levels of distributor restock requests. Similarly, the hosiery and underwear category saw sales fall to $130.4 million. The drop was due to lower Gildan branded socks and underwear sales in the mass retail channel.
On Wednesday, the company also announced that it is expanding its global manufacturing footprint with the purchase of a sizeable land parcel in Bangladesh.
The expansion is part of Gildan’s plans to develop large-scale vertically-integrated manufacturing in South-east Asia to support expected sales growth.
“The company believes the build out of a large-scale manufacturing hub in South-east Asia will significantly enhance its positioning to service international markets and support other key sales growth drivers,” it said in a news release.
The multi-plant complex is expected to open at the end of 2021.
Looking ahead, the company is expecting 2019 GAAP diluted EPS of $1.75 to $1.85 and adjusted diluted EPS of $1.90 to $2.00, on projected sales growth in the mid-single-digit range.
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