Reported net income dived 14.3 per cent year over year for the second fiscal quarter ended July 5, 2015 at Canadian apparel marketer Gildan Activewear Inc.
Gildan reported net earnings of US $99.4 million or US $0.41 per share on a diluted basis compared with US $116.0 million or US $0.47 per share on a diluted basis for second quarter of fiscal 2016.Reported net income dived 14.3 per cent year over year for the second fiscal quarter ended July 5, 2015 at Canadian apparel marketer Gildan Activewear#
Before reflecting restructuring and acquisition-related costs of around $3.2 million after-tax in the quarter, Gildan posted adjusted net earnings of $102.6 million or $0.42 per share.
Net earnings for the reporting quarter continued to reflect the impact of the Printwear selling price reductions, in advance of the benefit of lower manufacturing and cotton costs.
The positive earnings impact of higher sales and operating margins in Branded Apparel and lower income taxes was more than offset by lower Printwear sales and operating margins and higher financial expenses.
Net sales in the second quarter of fiscal 2015 amounted to $714.2 million, up 2.9 per cent from $693.8 million in the corresponding quarter of prior fiscal.
“This reflects an increase of 12.3 per cent in sales for Branded Apparel, partially offset by a 1.2 per cent decline in Printwear sales largely due to the selling price reductions,” it said in a press release.
Gildan added that net sales in the quarter were below the Company's guidance of net sales of $750 million, which it provided on May 14, 2015.
“This was primarily as a result of lower than anticipated inventory replenishment by a major US retail customer and lower than anticipated Printwear sales in Europe,” the marketer informed.
At end the end of the quarter, the Company generated $18.5 million of free cash flow after financing capital expenditures of $67.3 million and seasonal working capital changes.
Capital investments were primarily for new yarn-spinning facilities in the US, textile projects in Rio Nance and the expansion of the Company's printwear distribution centre in Eden, North Carolina.
The Company ended the quarter with cash and cash equivalents of $44.6 million and outstanding bank indebtedness of $593.0 million.
The Company is now projecting adjusted diluted EPS for the 12 months ending January 3, 2016 to be at the bottom of its previous guidance range of $1.50–$1.55 on projected sales of close to $2.6 billion.
“This is primarily to reflect the less favourable than projected results in the second quarter of 2015 and the continuing impact of the issues affecting second quarter sales and earnings, the company observed.
Sales growth in Printwear for the full fiscal year is now projected to be in excess of 10 per cent compared to the Company's previous projection of around 12 per cent due to lower sales in Europe.
Sales growth in Branded Apparel is now expected to be approximately 15 per cent as against previously anticipated sales growth in excess of 20 per cent. (AR)
Fibre2Fashion News Desk – India
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