Growth in sales revenues, decline in socks sales, Gildan
16 Oct '10
5 min read
Unit shipments of activewear in international and other screenprint markets increased by approximately 60% compared to the third quarter of fiscal 2009, and shipments of activewear and underwear to retailers more than doubled from a small base in the third quarter of last year.
The decline in sales of socks compared to last year was primarily due to short-term issues in servicing demand due to increased reliance on third party contractors during the ramp-up of Rio Nance IV and the transition to the new U.S. retail distribution centre. In addition, average net selling price realizations were lower than last year due to a shift towards a more basic product-mix. The Company continues to be satisfied with the performance of its major continuing sock programs and believes that it is well positioned to continue to gain market share in socks in the mass-market retail channel.
Gross margins in the third quarter increased to 27.1%, compared to 24.4% in the third quarter of fiscal 2009, due to more favourable activewear net selling prices, more favourable product-mix and lower cotton costs compared to last year. Gross margins in the third quarter of fiscal 2010 were negatively impacted by the initial ramp-up of new retail underwear and activewear programs, additional costs due to the use of third party sock contractors and continuing supply chain inefficiencies related to the Haiti earthquake.
Selling, general and administrative expenses in the third quarter increased to U.S. $39.9 million, compared to U.S. $36.2 million in the third quarter of fiscal 2009. The increase in SG&A expenses from last year was primarily due to higher volume-driven distribution expenses, inefficiencies due to the initial ramp-up of the new retail distribution centre at Charleston, S.C., the impact of the higher-valued Canadian dollar on corporate administrative expenses, and higher performance-driven variable compensation expenses. Selling, general and administrative expenses amounted to 10.1% of sales in the third quarter of fiscal 2010 compared to 11.8% of sales in the third quarter of fiscal 2009.
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