Gildan posts rise in Q2 net sales and earnings

Gildan Activewear’s consolidated net sales of 715.4 million dollars in the second quarter ended July 2, 2017 were up 26.5 million dollars or 3.8 percent, reflecting sales increase of 1.9 percent in the printwear segment and 8.1percent in branded apparel. The sales increase, the company said, was driven by acquisitions and higher net selling prices, which was partly offset by lower unit sales volumes of fleece and the impact of unfavourable foreign exchange.

Consolidated gross margin in the second quarter was 29.8 percent, up 240 basis points compared to the same period last year. Net earnings for the quarter amounted to 107.7 million dollars or 0.48 dollar per share on a diluted basis, compared with net earnings of 94.7 million dollars or 0.40 dollar per share on a diluted basis for the same period last year.

Second quarter highlights of Gildan’s results

After excluding the impact of after-tax restructuring and acquisition-related costs of 2.8 million dollars in the quarter and 1.7 million dollars in the prior year quarter, Gildan reported adjusted net earnings of 110.5 million dollars or 0.49 dollar per share on a diluted basis for the second quarter of 2017, up from 96.4 million dollars or 0.41 dollar per share on a diluted basis in the same quarter last year. The company said that 19.5 percent increase in adjusted diluted EPS in the quarter was mainly driven by strong operating margin improvement, the impact of acquisitions and the benefit of share repurchases.

Printwear net sales for the quarter were 480.1 million dollars, up 1.9 percent over the same period last year. The incremental sales contribution of approximately 29 million dollars from acquisitions, Gildan said, combined with strong double-digit organic unit sales increases in fashion basics, higher net selling prices and increased shipments in international markets were partly offset by lower unit sales volumes of fleece in the quarter and the impact of unfavourable foreign exchange. Printwear segment operating income for the three months totalled 122.1 million dollars, up 10 percent compared to 111 million dollars for the same period last year.

Net sales for the branded apparel segment in the quarter were 235.3 million dollars, up 8.1 percent, driven primarily by the approximate 17 million dollars sales contribution of the Peds acquisition and strong growth in men's underwear, partly offset by lower global lifestyle and Gold Toe branded sock sales reflecting weakness in department stores and national chains. Branded apparel generated strong operating income of 26 million dollars, up 52 percent compared to 17.1 million dollars in the same quarter last year.

H1 net sales rise by 7.7 percent

Consolidated net sales of 1,380.7 million dollars in the first six months of 2017 increased by 98.5 million dollars or 7.7 percent compared to the same period last year, reflecting sales increases of 7.2 percent in the printwear segment and 8.6 percent in branded apparel. The increase in consolidated net sales was due to the aggregate incremental sales contribution of 106 million dollars from the acquisitions of Alstyle and Peds, as well as the American Apparel acquisition, which closed during the first quarter of 2017.

Gross margins for the six months of 29.1 percent were up 220 basis points compared to the same period last year, reflecting gross margin expansion in both operating segments. Consolidated adjusted operating margins totalled 16.2 percent, up 200 basis points over the same period last year. Net earnings for the period were 191.2 million dollars or 0.84 dollar per share on a diluted basis, up from net earnings of 157.9 million dollars or 0.66 dollar per share on a diluted basis for the same period last year.

Before reflecting after-tax restructuring and acquisition-related costs in both years, adjusted net earnings were 200.6 million dollars or 0.88 dollar per share on a diluted basis in the first six months of 2017, up 21.3 percent and 27.5 percent, respectively, compared to adjusted net earnings of 165.4 million dollars or 0.69 dollar per share in the same period last year.

Gildan updates FY17 earnings outlook

Gildan said, given the company's performance in the first half of the year, adjusted diluted EPS is now expected to be at the high end of the 1.60 dollars-1.70 dollars range, on projected consolidated and segmented net sales growth which remains in the high-single-digit range.

As projected when the company initiated its 2017 guidance, earnings growth was strong during the first half, while earnings in the second half of the year, it said, will reflect the anniversary of the Alstyle and Peds acquisitions and headwinds from higher raw material costs. The company now anticipates adjusted EBITDA at the high-end of its previous guidance range of 555-585 million dollars.

The company’s board of directors has declared a cash dividend of 0.0935 dollar per share, payable on September 11, 2017 to shareholders of record on August 17, 2017.

Picture:Facebook/Gildan