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Gildan Activerwear posts strong Q1 EPS growth of 39 percent

By Prachi Singh

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Business

Gildan Activewear said that its first quarter net sales improved 12.2 percent to 665.4 million dollars driven by acquisitions of Alstyle, Peds and American Apparel. Sales growth and operating margin expansion in the quarter translated to strong adjusted diluted EPS growth of 39 percent compared to last year. Sales increased 13.6 percent in the printwear segment and 9.2 percent in branded apparel.

Q1 earnings witness growth

Consolidated gross margin in the first quarter was 28.4 percent, up 200 basis points compared to the same period last year. Adjusted operating margins of 15 percent were up 200 basis points compared to 13 percent in the same period last year. Net earnings totalled 83.5 million dollars or 0.36 dollar per share on a diluted basis for the three months ended April 2, 2017, compared with net earnings of 63.2 million dollars or 0.26 dollar per share on a diluted basis for the three months ended April 3, 2016.

Excluding after-tax restructuring and acquisition-related costs of 6.6 million dollars in the quarter against 5.8 million dollars in the same quarter last year, Gildan reported adjusted net earnings of 90.1 million dollars or 0.39 dollar per share on a diluted basis up from 69 million dollars or 0.28 dollar per share on a diluted basis in the prior year quarter.

Segment-wise highlights of Q1 results

Net sales for the printwear segment amounted to 445.6 million dollars, up 13.6 percent from 392.1 million dollars in the first quarter last year. The increase in printwear net sales, the company said, was mainly due to sales of 39.5 million dollars from the Alstyle and American Apparel acquisitions, higher net selling prices, and favourable product-mix, partly offset by unfavourable foreign exchange impacts.

Printwear segment operating income was 105.9 million dollars, up 24.3 percent compared to 85.2 million dollars for the same period last year. Operating margins for the segment were 23.8 percent, up 210 basis points over the prior year quarter.

Net sales for the branded apparel segment were 219.7 million dollars, up 9.2 percent from 201.2 million dollars in the first quarter of 2016. The increase in branded apparel sales, the company said, was primarily due to sales of 20.9 million dollars from the Peds acquisition and organic sales growth, which was partially offset by the impact from the planned exit of certain private label programs.

Operating income for the segment was 18.6 million dollars, up approximately 24.8 percent compared to 14.9 million dollars in the same quarter last year. Branded Apparel operating margins of 8.4 percent improved 100 basis points over the same quarter last year.

Gildan Activewear reaffirms full year guidance

Reaffirming its outlook for the year initiated on February 23, 2017, the company said adjusted diluted EPS is still expected in the range of 1.60 dollars to 1.70 dollars on expected consolidated net sales growth in the high single-digit range. Printwear and branded apparel net sales are each expected to increase in the high single-digit range driven by organic growth and the projected aggregate impact of approximately 160 to 185 million dollars from the acquisitions of Alstyle, Peds, and American Apparel.

The company is also reconfirming its expectations for adjusted EBITDA of 555-585 million dollars. The board of directors also declared a cash dividend of 0.0935 dollar per share, payable on June 12, 2017 to shareholders of record on May 18, 2017.

Picture:Peds website

Gildan Activewear