- Prachi Singh |
Gildan Activewear Inc. has said that its first quarter performance was largely in line with its expectations and the company is on track to attain its full year financial targets. Net earnings for the quarter were down to 0.31 dollar per share on a diluted basis, in the quarter. Net sales of 647.3 million dollars in the quarter, down 2.7 percent compared to the prior year reflecting a 3.2 percent increase in activewear sales and a 20.4 percent decline in the hosiery and underwear category.
Review of Gildan’s first quarter results
The company said, increase in activewear sales was mainly due to higher net selling prices, including foreign exchange and favourable product-mix driven by double digit sales growth in the fashion basics category, including American Apparel, Comfort Colors, and Gildan Softstyle ring-spun offering.
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International sales in the first quarter were up 24 percent, reflecting strong growth momentum in all markets. The decline in the hosiery and underwear sales category, the company added, was mainly due to the anticipated decline in unit sales volumes of socks at mass retailers, which are shifting emphasis toward their own private label brands. In addition, lower sock sales reflected the impact of the non-recurrence of the initial roll-out of a licensed program to a large national chain retailer, which occurred in the first quarter of the prior year. Underwear point of sales (POS) continued to perform strongly in the quarter.
Net earnings decline to 67.9 mn dollars in Q1
Gross margin totalled 27.2 percent, reflecting a 120 basis point decrease over the same period last year driven by impact of higher raw material and other input costs, partly offset by higher net selling prices, including foreign exchange and the positive impact of a richer product-mix. Operating income in the quarter was 76.3 million dollars and adjusted operating income was 82.7 million dollars, down 18 percent and 17 percent, respectively, compared to the same period last year. Adjusted operating margin was 12.8 percent compared to 15 percent in the first quarter of 2017.
Net earnings for the three months ended April 1, 2018 amounted to 67.9 million dollars or 0.31 dollar per share on a diluted basis, compared with 83.5 million dollars or 0.36 dollar per share on a diluted basis for the same period last year. Excluding the impact of after-tax restructuring and acquisition-related costs of 6.7 million dollars in the quarter and 6.6 million dollars in the prior year quarter, Gildan reported adjusted net earnings of 74.6 million dollars or 0.34 dollar per share, down 12.8 percent from 90.1 million dollars or 0.39 dollar per share in the same quarter last year.
Gildan reaffirms full year EPS outlook
The company reaffirmed its full year 2018 financial guidance of adjusted diluted EPS in the range of 1.80 dollars to 1.90 dollars on projected net sales growth in the low to mid-single-digit range, adjusted EBITDA in the range of 595 to 620 million dollars, and projected free cash flow of approximately 400 million dollars for the year. The company continues to project capital expenditures of approximately 125 million dollars for 2018.
While the company is projecting sales growth in the second quarter, adjusted operating margin is expected to be down year-over-year due to anticipated higher raw material and other input costs, and planned increases in e-commerce and distribution investments, partly offset by anticipated cost reductions stemming from the company’s organizational consolidation.
The board of directors has declared a cash dividend of 0.112 dollar per share, payable on June 11, 2018 to shareholders of record on May 17, 2018.