Gildan Activewear posts 8 percent rise in earnings

Gildan Activewear Inc. said in a statement that sales of 801.6 million dollars in the quarter, were up 4.9 percent over last year, setting us on track to deliver our full year sales target of mid-single-digit growth. The company generated GAAP diluted EPS of 49 cents, and adjusted diluted EPS of 56 cents up 8 percent over the prior year quarter.

The company added that higher sales reflected activewear sales of 665.6 million dollars, up 6.5 percent, partly offset by a 2.2 percent decline in the hosiery and underwear category where the company generated 136 million dollars in overall sales. The sales decline in the hosiery and underwear category resulted from lower sock sales volumes, which were largely offset by the large increase in underwear sales during the quarter. The underwear sales increase was due to the full roll-out of a new private label men's underwear program.

Highlight’s of Gildan Q2 results

While Gildan’s international sales were up slightly, the company saw softness in Europe and slower growth in China, particularly in the first two months of the quarter. Growth in international sales was stronger in the month of June and the company continues to project double-digit growth in the second half of the year.

Gross margin for the quarter was 27.8 percent, down 50 basis points from 28.3 percent in the second quarter last year. Net earnings amounted to 99.7 million dollars or 49 cents per share on a diluted basis, compared with 109 million dollars or 51 cents per share on a diluted basis, for the same period last year. Gildan reported adjusted net earnings of 115 million dollars or 56 cents per share on a diluted basis, up from 111.5 million dollars or 52 cents per share on a diluted basis, in the second quarter of 2018, up 7.7 percent.

Gildan’s sales improve marginally in the first half

Net sales for the six months totalled 1,425.6 million dollars, up 1 percent from the same period last year, reflecting an increase of 1.7 percent in activewear sales to 1,159.2 million dollars, partly offset by a 2 percent decline in the hosiery and underwear category.

Gross margin of 26.9 percent for the first six months was down 90 basis points compared to the same period last year. Net earnings amounted to 122.4 million dollars or 59 cents per share on a diluted basis, compared with 176.9 million dollars or 82 cents per share on a diluted basis, for the same period last year. Gildan reported adjusted net earnings of 147.8 million dollars or 72 cents per share on a diluted basis, down from 186.1 million dollars or 86 cents per share on a diluted basis for the first six months of 2018.

Gildan expects mid-single-digit revenue growth in 2019

The company said, rith results for the first half tracking well within the company's expectations, it reconfirmed the full year sales guidance projecting sales growth in the mid-single-digit range and updated its full year EPS and adjusted diluted EPS guidance to the upper half of the ranges previously provided. The company is now projecting GAAP diluted EPS of 1.80 dollars to 1.85 dollars and adjusted diluted EPS of 1.95 dollars to 2 dollars, compared to its previous guidance range of GAAP EPS of 1.75 dollars to 1.85 dollars and adjusted diluted EPS of 1.90 dollars to 2 dollars. The company expects to generate adjusted EBITDA in excess of 615 million dollars.

For the third quarter of 2019, the company is projecting sales growth to be in the mid-single-digit range, lower than previously anticipated due to revised timing of fleece sales. With lower than previously anticipated fleece sales in the third quarter combined with the impact of continued gross margin pressure from higher raw material and other input costs, Gildan now expects adjusted EPS growth to be flat in the third quarter. For the fourth quarter of 2019, it is projecting strong sales and adjusted EPS growth.

The company’s board has declared a cash dividend of 134 cents per share, payable on September 9, 2019 to shareholders of record on August 15, 2019.