• Home
  • Executive
  • Management
  • Gildan Activewear posts 3.5 percent decline in Q2 net sales

Gildan Activewear posts 3.5 percent decline in Q2 net sales

By Prachi Singh

loading...

Scroll down to read more

Management

Gildan Activewear announcing its results for the three months ended July 3, 2016 said that net earnings were in line with its expectations. Net sales were below the company's expectations and reflected headwinds from distributor inventory destocking in printwear, the exit of certain private label programs in retail, and unfavourable foreign exchange. Consolidated net sales in the second quarter amounted to 688.9 million dollars, down 3.5 percent, reflecting sales decreases of 1.4 percent in the printwear segment and 7.9 percent in branded apparel.

Consolidated gross margins increased to 27.4 percent, up 70 basis points compared to the second calendar quarter last year. Adjusted operating margins totalled 15.3 percent compared to 15.5 percent in the same period last year due to the 20 basis point dilutive impact of Alstyle. Net earnings totalled 94.7 million dollars or 0.40 dollar per share on a diluted basis compared with net earnings of 99.4 million dollars or 0.41 dollar per share for the three months ended July 5, 2015.

Segment-wise operating results

Net sales for the printwear segment amounted to 471.2 million dollars, down from 477.8 million dollars in the same calendar quarter last year. Unit sales volume growth was particularly strong in fashion basics and performance products with double digit growth in both product categories. Sales volumes in international printwear markets increased by 15 percent, offset in part by the impact of weaker international currencies relative to the US dollar.

Net sales for the branded apparel segment were 217.6 million dollars, down from 236.3 million dollars in the second calendar quarter of 2015. Momentum in unit market share penetration for the Gildan brand in the men's socks and underwear product categories continued to build in the quarter. In addition, during the quarter Gildan men's underwear programs gained improved in-store placement at various retailers. The company believes this improved in-store placement will continue to drive further market share gains for the Gildan® brand in the men's underwear category.

Consolidated net sales of 1,282.2 million dollars in the first six months of 2016 were down 5 percent compared to 1,350.3 million dollars in the same period last year, reflecting sales decreases of 5 percent in the printwear segment and 5.1 percent in branded apparel.

lowers outlook for the full year

The company is now projecting adjusted diluted EPS to be in the range of 1.50 dollars-1.55 dollars compared to its prior range of adjusted diluted EPS of 1.50 dollars-1.60 dollars, and adjusted EBITDA of approximately 545 dollars-555 million dollars compared to the Company's previous projection of 545 dollars-570 million dollars. Consolidated net sales for the year are now projected to be approximately 2.65 billion dollars reflecting projected sales of approximately 1.65 billion dollars in printwear and branded apparel sales of approximately one billion dollars. This compares to the Company's prior sales guidance of consolidated net sales in excess of 2.6 billion dollars consisting of printwear sales in excess of 1.6 billion dollars and branded apparel sales in excess of one billion dollars.

The company has lowered its assumption for printwear fleece sales in the third quarter as a result of lower than anticipated pre-order bookings to date. In addition, the company is projecting a continuation of the current softness in the retail environment. The acquisitions of Alstyle and Peds are projected to contribute aggregate sales of approximately 115 million dollars in 2016, while the impact from the acquisitions on the company's net earnings is expected to be minimal in 2016.

The Board of Directors has declared a cash dividend of 0.078 dollar per share, payable on September 6, 2016 to shareholders of record on August 11, 2016.

picture:gildan online

Gildan Activewear