Gildan Activewear registers record sales & earnings for Q4
Gildan Activewear Inc announced its financial results for the fourth quarter of its 2010 fiscal year as well as for the full fiscal year. The Company also provided its current forecast for revenues, gross margins and selling, general and administrative expenses for fiscal 2011.
Fourth Quarter Sales and Earnings
Net earnings for the fourth fiscal quarter ended October 3, 2010 were U.S. $56.8 million or U.S. $0.47 per share, after reflecting a restructuring charge of U.S. $0.01 per share related to the consolidation of U.S. distribution activities announced on December 10, 2009. Before the restructuring charge, adjusted net earnings for the fourth quarter amounted to U.S. $58.3 million or U.S. $0.48 per share, up 37.5% and 37.1% respectively from net earnings of U.S. $42.4 million or U.S. $0.35 per share in the fourth quarter of fiscal 2009. Both net earnings and earnings per share in the fourth quarter of fiscal 2010 were a record for the fourth quarter of a fiscal year.
The growth in net earnings compared to last year was primarily due to strong unit sales growth in the U.S. distributor channel, which was achieved in spite of low activewear finished goods inventory levels throughout the quarter, lower promotional activity in the channel, including the non-recurrence of a special devaluation discount applicable to distributor inventories which was recorded in the fourth quarter of last year, and the proceeds from an insurance claim which partially compensated for the impact of lost sales and additional supply chain costs in fiscal 2010 due to the Haiti earthquake in January 2010.
These positive factors more than offset the unfavourable impact of significantly higher cotton costs compared to the fourth quarter of last year and higher selling, general and administrative expenses. Although selling price increases have been implemented in the U.S. wholesale distributor channel since July, to offset inflation in cotton and other input costs, these price increases were not applied to back-orders already placed at the time of implementing the increases, and therefore only partially offset the impact of the significant cotton cost increases in the quarter.
Net sales in the fourth quarter of fiscal 2010 amounted to U.S. $368.9 million, up 22.3% from U.S. $301.7 million last year. Sales of activewear and underwear amounted to U.S. $307.5 million, up 27.7% from fiscal 2009, and sales of socks were U.S. $61.5 million, up 1.0% from last year. Unit sales volumes for socks increased approximately 9% from the fourth quarter of fiscal 2009.
The growth in sales of activewear and underwear compared to the fourth quarter of fiscal 2009 was primarily due to a 21.3% increase in unit volume shipments as a result of increased market share in the U.S. distributor channel, a 2.7% increase in overall industry shipments from U.S. distributors to U.S. screenprinters, strong growth in international markets, in particular in Europe, and significantly increased shipments of underwear and activewear to mass-market retailers, partially offset by a larger reduction of distributor inventory levels during the fourth quarter compared to the fourth quarter of fiscal 2009.