Gildan Activewear Q1 sales skyrocket 38.5%

The 13.0% growth in sales for the Branded Apparel segment was due to the impact of the acquisition of Anvil and increased sales of Gildan branded activewear to retail customers, partially offset by lower sales of socks compared to the first quarter of last year.

Consolidated gross margins in the first quarter were 26.8% compared to 2.1% last year. The significant recovery in gross margins was due to the impact of lower-cost cotton, the improved industry conditions for Printwear compared to the first quarter of last year, and more favourable product-mix for Branded Apparel, partially offset by the impact of the reduction in selling prices for Printwear and the impact on manufacturing costs of inflation in purchased cost inputs and the repairs due to the hurricane damage.

Selling, general and administrative expenses in the first quarter were U.S. $69.4 million, or 16.5% of net sales, compared with U.S. $50.8 million, or 16.7% of net sales, in the first quarter of last year. The increase in SG&A expenses was primarily due to increased variable performance-driven compensation expenses, increased marketing and advertising expenses and the impact of Anvil.

In the first quarter, the Printwear segment reported operating income of U.S. $45.9 million, compared to an operating loss of U.S. $30.8 million in the first quarter of fiscal 2012. The more favourable results for the Printwear segment were primarily due to the impact of lower cotton costs, improved industry conditions and the impact of the Anvil acquisition, partially offset by lower selling prices and higher SG&A expenses.

The Branded Apparel segment reported quarterly operating income of U.S. $19.6 million, compared with U.S. $2.4 million in the first quarter of fiscal 2012. The improved results for Branded Apparel were due to lower cotton costs, the acquisition of Anvil and the growth of Gildan branded activewear sales to retailers, partially offset by lower sales of socks and higher SG&A expenses.

Cash Flow and Financial Position

The Company generated free cash flow of U.S. $21.3 million in the first quarter, after financing a seasonal increase in inventories and capital expenditures of U.S. $25.3 million. The Company ended the first quarter of the fiscal year with bank indebtedness of U.S. $177.0 million and cash and cash equivalents of U.S. $82.0 million.