Home / Knowledge / News / Apparel/Garments / Q4 net earnings fall due to high-cost cotton, Gildan
Q4 net earnings fall due to high-cost cotton, Gildan
05
Dec '11
Gildan Activewear Inc. announced its results for the fourth quarter of fiscal 2011 as well as for the full fiscal year, which were in line with its prior earnings guidance. The Company also initiated its sales and earnings guidance for fiscal 2012.

The Company is projecting a loss in the first quarter of fiscal 2012, followed by an anticipated gradual strengthening in results in the balance of the fiscal year, as the Company finishes consuming inventories produced with high-cost cotton and achieves projected manufacturing efficiencies. Due to the loss in the first quarter, full year adjusted EPS in fiscal 2012 is currently projected to be approximately U.S. $1.30, compared to adjusted EPS of U.S. $2.01 in fiscal 2011.

Fourth Quarter Sales and Earnings

Net earnings for the fourth fiscal quarter ended October 2, 2011 were U.S. $48.5 million or U.S. $0.40 per share on a diluted basis, down respectively 14.6% and 14.9% from U.S. $56.8 million or U.S. $0.47 per share in the fourth quarter of fiscal 2010.

Results for the fourth quarter include restructuring charges totalling U.S. $2.3 million after-tax or U.S. $0.02 per share, to write down the carrying value of facilities held for sale and to recognize additional pension costs for the former Gold Toe Moretz pension plan, which the Company intends to terminate in 2012. Before the restructuring charges in both years, adjusted net earnings were U.S. $50.8 million or U.S. $0.42 per share, down respectively 12.9% and 12.5% from U.S. $58.3 million or U.S. $0.48 per share.

The decline in adjusted net earnings and EPS in the fourth quarter compared to last year was due to the significant increase in the cost of cotton, which was not fully recovered in higher net selling prices, lower unit sales volumes for activewear and the non-recurrence of insurance proceeds and a cotton subsidy received in the fourth quarter of last year. These negative factors were partially offset by the positive impact of income tax recoveries in the fourth quarter of fiscal 2011, more favourable activewear product-mix, lower SG&A expenses and the earnings accretion from the acquisition of Gold Toe Moretz.

Adjusted EPS slightly exceeded the Company's guidance for the quarter of approximately U.S. $0.40 provided on August 4, 2011. Compared to its August guidance, the unfavourable impact of weaker demand and increased promotional discounting in the wholesale distributor channel, lower inventory replenishment by mass-market retailers and lower than forecast sock manufacturing efficiencies was more than offset by the later than anticipated timing of destocking of inventories by wholesale distributors, which is now occurring in the first quarter of fiscal 2012, and the benefit of income tax recoveries.

Net sales in the fourth quarter amounted to U.S. $481.8 million, up 30.6% from U.S. $368.9 million in the fourth quarter of fiscal 2010. The Company had forecast in August that sales in the fourth quarter would be slightly below U.S. $500 million. Sales of activewear and underwear amounted to U.S. $368.9 million, up 20.0% from fiscal 2010, and sales of socks were U.S. $112.9 million, up 83.6% from U.S. $61.5 million a year ago.

Must ReadView All

Textiles | On 29th May 2017

Special package creates 7,50,000 jobs in garment sector

The special garment package of Rs 6,000 crore that was introduced by...

Md Siddiqur Rahman, president, BGMEA, addressing a press conference with other dignitaries. Courtesy: BGMEA

Apparel/Garments | On 29th May 2017

BGMEA asks govt for 5% incentive for 2 years in Budget

The Bangladesh Garment Manufacturers and Exporters Association...

Textiles | On 29th May 2017

Tintex, Bruckner bring new effects to knitted fabric

The textile company Tintex has joined hands with the system supplier...

Interviews View All

Binoy Ravjani
Hero's Fashion

‘One of the recent trends in hand block printing is the indigo process,...

Dinaz Madhukar
DLF Emporio and DLF Promenade

‘Each event and promotion is planned out keeping in mind the business of...

Jurgen Gauger
Spreadshirt

‘Buying crowdsourced or creative designs are much more appealing to the...

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Suresh Patel
Sidwin Fabric

Sidwin Fabric is a manufacturer and exporter of polypropylene textiles and ...

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Karan Arora
Karan Arora

Bridal couture created with rich Indian heritage, exquisite craftsmanship...

Yash P. Kotak
Bombay Hemp Company

One of the directors of Bombay Hemp Company, Yash P. Kotak, speaks to...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

news category


Related Categories:
May 2017

May 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search