Gildan posts drop in Q1 sales

For the first quarter, Gildan Activewear Inc. generated net sales of 703 million dollars, down 72 million dollars or 9 percent, reflecting anticipated headwinds tied to the current demand environment and to strong comparative periods in the first half of 2022.

The company ended the quarter with GAAP diluted EPS of 54 cents; and adjusted diluted EPS of 45 cents.

"We are pleased with our top line results having met our sales expectations for the quarter. Moreover, even though the economic environment remains uncertain, we remain comfortable with our full year outlook given our strong competitive position, which we are reinforcing with the Gildan Sustainable Growth (GSG) strategy, and POS trends across our business coming in line with our expectations during the first quarter,” said Glenn J. Chamandy, Gildan’s president and CEO in a statement.

In activewear, Gildan generated sales of 588 million dollars, down 80 million dollars or 12 percent compared to the same period last year. International sales in the quarter were down 17 percent versus the prior year. The hosiery and underwear category reported sales of 115 million dollars, up 8 million dollars or 7 percent, over the prior year quarter, mainly driven by sock volume growth.

The company generated gross profit of 188 million dollars in the quarter and adjusted gross profit of 184 million dollars, down respectively 53 million dollars and 55 million dollars over the prior year, driven by the decline in sales and lower gross margins.

Gross margin of 26.7 percent and adjusted gross margin of 26.2 percent were down year-over year by 430 basis points and 470 basis points, respectively. Operating income was 128 million dollars or 18.2 percent, while adjusted operating income was 103 million dollars or 14.6 percent of sales.

For 2023, Gildan expects revenue growth to be in the low single digit range; adjusted operating margin within 18 percent to 20 percent annual target range; and adjusted diluted EPS in line with 2022.

The company’s board of directors has declared a cash dividend of 186 cents per share, payable on June 19, 2023 to shareholders of record as of May 24, 2023.