The overall decline in U.S. industry shipments primarily reflected lower demand for promotional white T-shirts. The table below summarizes data from the S.T.A.R.S. report produced by ACNielsen Market Decisions, which tracks unit volume shipments from U.S. wholesale distributors to U.S. screenprinters, for the quarter ended September 30, 2008.
Gross margins of 32.1% in the fourth quarter of fiscal 2008 were essentially flat compared to last year. The positive gross margin impact of higher activewear selling prices and favourable manufacturing efficiencies from the consolidation of textile facilities was offset by higher cotton and energy costs, unfavourable product-mix and a higher proportion of U.S. manufactured socks due to the acquisition of Prewett, which provide lower gross margins than the Company's activewear products and socks produced in Gildan's new sock manufacturing facility in Honduras.
Selling, general and administrative expenses were U.S. $39.1 million, or 12.1% of sales, compared to U.S. $27.9 million, or 10.9% of sales in the fourth quarter of fiscal 2007. The increase in selling, general and administrative expenses was due to the acquisition of Prewett, higher distribution and transportation expenses, a provision of U.S. $1.5 million for non-collection of accounts receivable, and higher corporate infrastructure costs. The increase of U.S. $5.4 million in depreciation and amortization expenses was primarily due to the ramp-up of major capacity expansion projects and the acquisition of Prewett, including the amortization of acquired intangible assets.
The Company recorded an income tax expense of U.S. $25.3 million in the fourth quarter of fiscal 2008, compared to an income tax recovery of U.S. $4.6 million in the fourth quarter of fiscal 2007. The current year expense includes a one-time income tax charge of U.S. $26.9 million, or U.S. $0.22 per share, related to the settlement of the CRA audit. The fourth quarter of fiscal 2007 included a one-time income-tax recovery of U.S. $1.9 million relating to a prior taxation year which became statute-barred during fiscal 2007.
Sales for fiscal 2008 were U.S. $1,249.7 million, up 29.6 % from U.S. $964.4 million in fiscal 2007. The increase in sales was due to a U.S. $151.5 million increase in sock sales, primarily due to the acquisition of Prewett, an increase of approximately 6.7% in activewear selling prices and a 10.2% increase in unit sales volumes for activewear and underwear.
Net earnings were U.S. $144.6 million, or U.S. $1.19 per share on a diluted basis, in fiscal 2008, compared to net earnings of U.S. $130.0 million, or U.S. $1.07 per share in fiscal 2007. Results included restructuring and other charges of U.S. $4.9 million after tax, or U.S. $0.04 per share, in fiscal 2008 and U.S. $27.3 million after tax, or U.S. $0.22 per share, in fiscal 2007.
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