Gildan sales growth disappoints in Q3

Montreal-based Gildan Activewear announced a slight increase in third quarter net profits to 123.1 million dollars (80.9 million pounds) or 50 cents per share, compared with 122.7 million dollars (80.7 million pounds) or 50 cents per share last year. Net sales amounted to 674.5 million dollars (443.4 million pounds), compared with 666 million dollars (437.8 million pounds) in the third quarter of 2014.

Sales growth fell below projections, which Gildan attributed to ‘continued low retailer inventory replenishment’ and weak back-to-school sales. During a conference call with analysts, chief executive Glenn Chamandy said that although demand was high, difficulties with stock replenishment at Wal-mart in the United States prevented the growth the company had initially expected.

Branded sales did, however, rise by 1.7 percent as branded volumes increased by approximately 30 percent. Printwear products, which don’t feature the company’s brand, saw sales grow 1.1 percent, but Gildan warned that sales would be low for the full-year as a result of unseasonably warm weather, which hampered growth.

On a more positive note, Gildan said operating margins increased in both segments during the quarter as manufacturing and raw material costs decreased. Higher unit sales volumes and lower manufacturing costs offset lower net selling prices and an unfavourable product-mix for Printwear, This was due to later timing of fleece shipments, increased administrative costs and expenses related to financial and income tax.

Gildan also said sales rose thanks to the first delivery of Gildan Branded socks and underwear to an unnamed new major American mass retail customer. The company also expanded its retail network with 6,000 stores and aims to have 18,000 stores by the end of this year.

The company has reduced its projected full year earnings per share to be between 1.46 and 1.48 cents, compared with an earlier projection of about 1,50 cents. It expects net sales of almost 2.6 billion dollars, also lower than previous estimates.