Gildan announces new retail programs for Fiscal 2010
Gildan Activewear Inc announced its financial results for the fourth quarter of its 2009 fiscal year as well as for the full fiscal year. The Company also updated its outlook and business plans for fiscal 2010, including the announcement of new retail programs which Gildan has been awarded.
Fourth Quarter Sales and Earnings
Gildan reported net earnings of U.S. $42.4 million and diluted EPS of U.S. $0.35 for its fourth fiscal quarter ended October 4, 2009, after reflecting a charge of U.S. $8.9 million or U.S. $0.07 per share for a special distributor inventory devaluation discount, as described more fully below. Net earnings in the fourth quarter of fiscal 2008 amounted to U.S. $21.8 million, or U.S. $0.18 per share on a diluted basis. Before a special income tax charge of U.S. $26.9 million or U.S. $0.22 per share recorded in the fourth quarter of last year, adjusted net earnings and diluted EPS in the fourth quarter of fiscal 2008 amounted to U.S. $49.7 million or U.S. $0.41, respectively.
Adjusted EPS in the fourth quarter of fiscal 2009, before reflecting the impact of the special devaluation discount, increased by U.S. $0.01 compared to adjusted EPS in the fourth quarter of fiscal 2008, before reflecting the special income tax charge. The positive EPS impact of increased manufacturing efficiencies, favourable product-mix and lower selling, general and administrative expenses was essentially offset by lower activewear selling prices, lower unit sales, and the impact of planned production downtime taken in the fourth quarter of fiscal 2009.
Early in the first quarter of fiscal 2010, the Company reduced gross selling prices for the majority of its activewear products in the U.S. wholesale distributor channel, and applied the benefit of the selling price reduction to inventories held by distributors through a special inventory devaluation discount. Net sales and gross margins in the fourth quarter of fiscal 2009 reflected both the significant negative impact of the short-term promotions in the fourth quarter as well as the impact of the special discount, which is accounted for as an adjustment to sales in the fourth quarter. Gross margins in the first quarter of fiscal 2010 will reflect the impact of the reduction in gross selling prices, but the negative impact in the first quarter is expected to be partially offset by a reduction in short-term promotions. The Company believes that the approach it has taken to pricing is enhancing the ability of its wholesale distributors to plan their business and helping to stimulate screenprinter demand for Gildan products.
Net sales in the fourth quarter of fiscal 2009 amounted to U.S. $301.7 million, down 7.1% from U.S. $324.7 million in the fourth quarter of last year. Sales of activewear and underwear were U.S. $240.8 million, down 4.8% from U.S. $253.0 million last year, and sales of socks were U.S. $60.9 million, down 15.1% from U.S. $71.7 million last year.