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Gildan Activewear registers record sales & earnings for Q4
03 Dec '10
5 min read
Market conditions continued to be strong at the end of the fourth quarter. The Company continued to have a substantial open order position at the quarter-end, and industry shipments from U.S. distributors to U.S. screenprinters for the month of October were up by 5.5% from October 2009, according to the S.T.A.R.S. report.
The increase in sales of socks compared to the fourth quarter of fiscal 2009 was due to the approximate 9% increase in unit shipments of socks, which was largely offset by a lower-valued more basic product-mix and lower selling prices for certain sock programs, including the impact of significantly increased participation in back-to-school promotions. Sell-through of socks provided by Gildan from retailers to consumers was strong during the fourth quarter in the men's and boys' categories.
Gross margins in the fourth quarter were 27.3%, compared to 25.7% in the fourth quarter of fiscal 2009. The increase in gross margins was due to the non-recurrence of the special distributor inventory devaluation discount a year ago, the proceeds from the Haiti insurance claim, which reflected the maximum benefit of U.S. $8 million receivable by Gildan under the coverage in its insurance policy, and the impact of a cotton subsidy in the Company's yarn-spinning joint venture.
Higher year-over-year cotton costs negatively impacted gross margins by approximately 380 basis points in the fourth quarter, of which only approximately 150 basis points was recovered in increased selling prices. Gross margins in the fourth quarter of fiscal 2010 were also negatively impacted by start-up inefficiencies in underwear manufacturing and additional costs incurred to mitigate the loss of production due to the Haiti earthquake.
Selling, general and administrative expenses in the fourth quarter were U.S. $42.0 million, or 11.4% of sales, compared to U.S. $34.1 million, or 11.3% of sales in the fourth quarter of fiscal 2009. The increase in selling, general and administrative expenses was primarily due to higher volume-driven distribution expenses, higher performance-driven variable compensation expenses, increased administrative and distribution infrastructure to support the development of the Company's retail initiatives, and the impact of the higher-valued Canadian dollar on corporate administrative expenses. Selling, general and administrative expenses in the fourth quarter included a charge of U.S. $1.9 million for provisions for doubtful accounts receivable, compared with U.S. $3.0 million in the fourth quarter of last year.
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The increase in sales of socks compared to the fourth quarter of fiscal 2009 was due to the approximate 9% increase in unit shipments of socks, which was largely offset by a lower-valued more basic product-mix and lower selling prices for certain sock programs, including the impact of significantly increased participation in back-to-school promotions. Sell-through of socks provided by Gildan from retailers to consumers was strong during the fourth quarter in the men's and boys' categories.
Gross margins in the fourth quarter were 27.3%, compared to 25.7% in the fourth quarter of fiscal 2009. The increase in gross margins was due to the non-recurrence of the special distributor inventory devaluation discount a year ago, the proceeds from the Haiti insurance claim, which reflected the maximum benefit of U.S. $8 million receivable by Gildan under the coverage in its insurance policy, and the impact of a cotton subsidy in the Company's yarn-spinning joint venture.
Higher year-over-year cotton costs negatively impacted gross margins by approximately 380 basis points in the fourth quarter, of which only approximately 150 basis points was recovered in increased selling prices. Gross margins in the fourth quarter of fiscal 2010 were also negatively impacted by start-up inefficiencies in underwear manufacturing and additional costs incurred to mitigate the loss of production due to the Haiti earthquake.
Selling, general and administrative expenses in the fourth quarter were U.S. $42.0 million, or 11.4% of sales, compared to U.S. $34.1 million, or 11.3% of sales in the fourth quarter of fiscal 2009. The increase in selling, general and administrative expenses was primarily due to higher volume-driven distribution expenses, higher performance-driven variable compensation expenses, increased administrative and distribution infrastructure to support the development of the Company's retail initiatives, and the impact of the higher-valued Canadian dollar on corporate administrative expenses. Selling, general and administrative expenses in the fourth quarter included a charge of U.S. $1.9 million for provisions for doubtful accounts receivable, compared with U.S. $3.0 million in the fourth quarter of last year.
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Gildan Activewear Inc
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