Gildan Activewear reported net sales of 891 million dollars, up 2.4 percent over the prior year, at the high end of previously provided guidance of flat to low single-digit growth.

The company’s activewear sales of 788 million dollars, were up 6 percent reflecting positive POS in the category across channels in North America.

The company has narrowed its previous guidance of revenue growth of flat to up low-single digits impacted by the expiration of the Under Armour sock licence agreement on March 31, 2024. Gildan also expects this development to have a minimal impact on profitability.

For the year ahead, the company "Gildan's Sustainable Growth Strategy (GSG) is clearly driving results, underscored by our record third quarter sales, including strong net sales growth of 6 percent in activewear. We remain deeply committed to delivering long term value for our stakeholders and are excited about the opportunities that lie ahead" said Glenn J. Chamandy, Gildan’s president and CEO in a statement.

Highlights of Gildan’s Q3 operating results

Hosiery and underwear sales for the quarter were 103 million dollars, down 18 percent versus the prior year due to the phase out of the Under Armour business and unfavourable mix and continued broader market weakness in underwear.

The company generated gross profit of 278 million dollars or 31.2 percent of net sales, representing a 370 basis point improvement.

Operating income reached 193 million dollars or 21.7 percent of net sales. Adjusted operating income was 200 million dollars or 22.4 percent of net sales, up 43 million dollars or 430 basis points compared to the prior year.

Gildan’s year-to-date net sales up 1.5 percent

Gildan’s net sales for the first nine months were 2,449 million dollars, up 1.5 percent versus the same period last year. In activewear, the company generated sales of 2,117 million dollars, up 93 million dollars or 5 percent.

International sales of 188 million dollars were up 9 percent. In the hosiery and underwear category, sales were down 15 percent versus the prior year.

The company generated gross profit of 751 million dollars, up 107 million dollars versus the prior year, driven by the increase in sales and gross margin. Gross margin of 30.7 percent was up by 400 basis points year over year.

The company added that operating income for the period declined to 439 million dollars or 17.9 percent of net sales, while adjusted operating income was 521 million dollars or 21.3 percent of net sales, up 122 million dollars or 480 basis points compared to the prior year.

Gildan lowers revenue outlook but raises earnings forecast

Narrowing the full year 2024 outlook range, the company said it expects revenue growth to be up low-single digits. Excluding the impact of expiration of Under Armour sock agreement, revenue growth is expected to be in the mid-single digit range.

Adjusted operating margin is forecasted to be slightly above 21 percent, compared to the previous guidance of slightly above the high end of 18 percent to 20 percent target range for 2024.

The company however, expects adjusted diluted EPS in the range of 2.97 dollars to 3.02 dollars, up between 15.5 percent and 17.5 percent year over year, compared to our previous guidance of 2.92 dollars to 3.07 dollars.

Gildan’s board has declared a cash dividend of 0.205 cents per share, payable on December 16, 2024 to shareholders of record as of November 21, 2024.