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Gildan reports Q1 results in line with prior guidance
10 Feb '12
5 min read
International sales revenues included in the Printwear business segment increased by over 30% compared to the first quarter of fiscal 2011.
The growth in sales for Branded Apparel to U.S. retailers was due to the impact of the acquisition of Gold Toe Moretz, together with higher net selling prices, partially offset by weaker retail market conditions and inventory destocking by retailers.
Consolidated gross margins in the first quarter were 2.1% compared to 24.6% last year. The decline in gross margins was due to higher cotton costs, the impact of the non-replenishment of inventories by distributors, which negatively impacted gross margins as a percentage of sales because promotional discounts in the quarter were largely based on distributor shipments to screenprinters, the impact of the special distributor inventory devaluation discount, and the impact of the extended manufacturing shutdown. The negative impact of these factors was partially offset by the impact of the Gold Toe Moretz acquisition, higher selling prices for products sold to retailers and improved sock manufacturing efficiencies.
In the first quarter, the Printwear division reported an operating loss of U.S. $30.8 million, compared with operating income of U.S. $62.8 million in the first quarter of fiscal 2011. The decline in the results for the Printwear segment was due to the impact of higher cotton costs, reduced unit sales volumes due to distributor inventory destocking, the special distributor inventory devaluation discount and the impact of the extended manufacturing shutdown. The Branded Apparel division reported an operating profit of U.S. $2.4 million, versus an operating loss of U.S. $6.7 million in the first quarter of fiscal 2011 as the negative impact of significantly higher cotton costs was more than offset by the accretion from the acquisition of Gold Toe Moretz, higher net selling prices, the non-recurrence of start-up inefficiencies in the Company's new U.S. distribution centre incurred in the first quarter of fiscal 2011 and improved manufacturing efficiencies due to the transition of sock manufacturing to Honduras. The benefits of ramping up the Company's sock manufacturing facilities in Honduras have not yet been fully realized.
Sales and Earnings Outlook
The Company has reconfirmed its prior guidance provided on December 1, 2011 of projected sales revenues of approximately U.S. $1.9 billion and projected EPS of approximately U.S. $1.30 for fiscal 2012. The Company continues to project sales revenues for the Printwear business of approximately U.S. $1.3 billion, and sales revenues for the Branded Apparel segment of approximately U.S. $0.6 billion. There are no material changes in the underlying assumptions provided in December 2011.
The growth in sales for Branded Apparel to U.S. retailers was due to the impact of the acquisition of Gold Toe Moretz, together with higher net selling prices, partially offset by weaker retail market conditions and inventory destocking by retailers.
Consolidated gross margins in the first quarter were 2.1% compared to 24.6% last year. The decline in gross margins was due to higher cotton costs, the impact of the non-replenishment of inventories by distributors, which negatively impacted gross margins as a percentage of sales because promotional discounts in the quarter were largely based on distributor shipments to screenprinters, the impact of the special distributor inventory devaluation discount, and the impact of the extended manufacturing shutdown. The negative impact of these factors was partially offset by the impact of the Gold Toe Moretz acquisition, higher selling prices for products sold to retailers and improved sock manufacturing efficiencies.
In the first quarter, the Printwear division reported an operating loss of U.S. $30.8 million, compared with operating income of U.S. $62.8 million in the first quarter of fiscal 2011. The decline in the results for the Printwear segment was due to the impact of higher cotton costs, reduced unit sales volumes due to distributor inventory destocking, the special distributor inventory devaluation discount and the impact of the extended manufacturing shutdown. The Branded Apparel division reported an operating profit of U.S. $2.4 million, versus an operating loss of U.S. $6.7 million in the first quarter of fiscal 2011 as the negative impact of significantly higher cotton costs was more than offset by the accretion from the acquisition of Gold Toe Moretz, higher net selling prices, the non-recurrence of start-up inefficiencies in the Company's new U.S. distribution centre incurred in the first quarter of fiscal 2011 and improved manufacturing efficiencies due to the transition of sock manufacturing to Honduras. The benefits of ramping up the Company's sock manufacturing facilities in Honduras have not yet been fully realized.
Sales and Earnings Outlook
The Company has reconfirmed its prior guidance provided on December 1, 2011 of projected sales revenues of approximately U.S. $1.9 billion and projected EPS of approximately U.S. $1.30 for fiscal 2012. The Company continues to project sales revenues for the Printwear business of approximately U.S. $1.3 billion, and sales revenues for the Branded Apparel segment of approximately U.S. $0.6 billion. There are no material changes in the underlying assumptions provided in December 2011.
Gildan Activewear Inc
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