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Gildan Activewear updates FY18 outlook after strong Q2

By Prachi Singh

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Business

Gildan Activewear Inc. has reported net sales of 764.2 million dollars in the second quarter ended July 1, 2018, up 6.8 percent compared to the prior year, which the company said, were driven by a 17.3 percent increase in activewear sales. International sales were up 35.2 percent, reflecting strong growth momentum across all markets. Gross margin in the second quarter totalled 28.3 percent, reflecting a 150 basis point decrease over the same period last year.

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Net earnings in the quarter amounted to 109 million dollars or 0.51 dollar per share on a diluted basis, compared with 107.7 million dollars or 0.48 dollar per share on a diluted basis for the same period last year. The company said, excluding the impact of after-tax restructuring and acquisition-related costs, Gildan reported adjusted EPS of 0.52 dollar per share on a diluted basis, up 6.1 percent from 0.49 dollar per share on a diluted basis in the same quarter last year.

Gildan’s net sales in H1 rise 2.2 percent

Net sales of 1,411.5 million dollars for the six months ended July 1, 2018, Gildan said, were up 30.8 million dollars or 2.2 percent compared to the same period last year driven by a 10.5 percent increase in activewear sales, partly offset by a 22.2 percent decline in the hosiery and underwear sales category. Activewear sales grew due to strong shipments in the second quarter across all major regions, including a 30.2 percent year-to-date increase in international sales.

The company added that gross margin for the first six months of 27.8 percent was down 130 basis points over the prior year, largely as a result of increases in raw material and other input costs and additional manufacturing costs related to disruptions within the supply chain in Central America. Net earnings were 176.9 million dollars or 0.82 dollar per share on a diluted basis compared to 191.2 million dollars or 0.84 dollar per share on a diluted basis for the same period last year. Adjusted net earnings were 186.1 million dollars or 0.86 dollar per share on a diluted basis compared to 200.6 million dollars or 0.88 dollar per share on a diluted basis in the same period last year.

Gildan updates full year outlook

Updating its outlook for fiscal 2018, the company said it is now projecting adjusted diluted EPS to be in the range of 1.85 dollars to 1.90 dollars compared to its previous guidance of 1.80 dollars to 1.90 dollars. Net sales growth is now projected to be in the mid-single-digit range, the upper end of the company's previous range of low to mid-single digit growth. The company expects adjusted EBITDA to be in the range of 605 to 620 million dollars compared to 595 to 620 million dollars previously.

The company is projecting double digit growth in activewear sales for the full year, including continued strong growth trends in fashion basics, fleece, and international markets. American Apparel sales are now expected to be at an exit run rate of close to 100 million dollars by the end of the year. Hosiery and underwear sales for 2018 are now projected to be down approximately 85 million dollars due to lower than previously anticipated sock sales. The company is also projecting adjusted diluted EPS growth in the high-single-digit to low-double-digit range in the third quarter, and strong double-digit adjusted diluted EPS growth in the fourth quarter.

The board of directors has declared a cash dividend of 0.112 dollar per share, payable on September 10, 2018 to shareholders of record on August 16, 2018.

Picture:Facebook/Gildan

Gildan Activewear
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