Interview with Mike Hoffman

Mike Hoffman
Mike Hoffman
Gildan Activewear SRL
Gildan Activewear SRL

How different is the market for activewear in Europe and the US?

The most important difference to note is that the US market is one large market broadly sharing the same language, currency and most importantly the same culture with regards to wearing basic garments such as t-shirts. Typically, in the US, around 10 shirts per people are being sold out of the imprint industry. In Europe, the market is very fragmented and each country has different currencies, languages and, definitely, buying behaviours. As a result, the number of garments consumed per person per year through the imprint industry varies between one and three, explaining that the European market is smaller than the US despite a larger population. Another difference is the importance of Asian imports (Bangladesh, India, China, Pakistan) enjoying duty free status into Europe, whereas the US has maintained duty for most Asian countries. As a result, the product offering has been widely extended whereas the US has remained more conventional, being dominated by a limited number of mills. Recently, however, the US has also experienced more diversity among others, the combed ring-spun 30/1 yarn used in t-shirts that offer a softer touch than traditional open-end yarn that dominated the US market for the last 60 years. This 30/1 yarn has been the most sold in Europe in that same period. The road to the market is similar, from brand to end consumer through distributors and decorators. But there is probably a larger part of the business bypassing distributors in Europe than in the US.

Any plans to launch your own brand?

The Gildan brand is the leading brand in the US and Canadian printwear channels. It has been the staple of our printwear division (wholesale market) for more than two decades, and in the last five years we have been developing the Gildan brand as a growing consumer brand in the US market.

Any plans to step into any of the Asian countries, where the demographics are rich?

Gildan has achieved a leadership position in the US and Canadian printwear channels, particularly within the basics category servicing wholesale distributors. We believe we can broaden our market opportunity through a number of initiatives. First of all, we intend to pursue deeper penetration in fashion basics and sports performance product categories in the North American printwear market, where our participation in these categories has not been as extensive as in the basics category. We also intend to continue expanding in the international printwear market such as Europe, Asia-Pacific and Latin America, which currently represent 8 per cent of the company's total consolidated net sales, by expanding distribution and by leveraging our brands. During our fiscal year 2014, we continued penetration into our targeted international markets. Sales in international printwear market grew by approximately 17 per cent, with particularly strong growth in Europe and Asia-Pacific where sales increased close to 30 per cent, and we entered new markets in Latin America.

What is your total expenditure and revenue for the current fiscal? What difference do you expect for the next?

Our consolidated sales in calendar year 2014 were US$ 2.3 billion, and for 2015, we are targeting US$2.65 billion. Revenue growth for 2015 will be driven by growth in both our operating segments. We expect strong unit volume growth in printwear to be partially offset by lower net selling prices due to the strategic pricing action we took in December 2014 to reinforce our leadership position in the industry and drive unit sales volume and earnings growth in calendar 2015 and beyond. Continuous capital investment has been a major contributor to the company's success, and has always been a part of Gildan's growth strategy. We are continuously seeking to optimise our cost structure by adding new low-cost capacity, investing in projects for cost reduction and further vertical-integration, as well as in enhancing our product quality. In fact, in the last 10 years, Gildan has invested approximately US$ 1.3 billion in capacity expansion and cost reduction projects. During fiscal 2014, we spent close to US$ 300 million in capital investments, primarily for the refurbishment of our Rio Nance 1 textile facility, the upgrade of sock manufacturing equipment and the former Anvil facility and a new distribution centre in Honduras. About half of the capital investments in fiscal 2014 went towards our major yarn-spinning manufacturing initiative. We are investing in new yarn-spinning facilities in order to support our projected sales growth and planned capacity expansion, and to continue to pursue our business model of investing in global vertically-integrated, low-cost manufacturing technology and in product technology, which will provide enhanced product quality and generate significant cost savings over the next three years. Last year, we essentially ramped up our first ring-spun yarn manufacturing facility in Salisbury, North Carolina and constructed a second yarn-spinning facility which began production in December. In addition, construction of a new yarn-spinning facility in Mocksville, North Carolina is currently under way. For calendar 2015, we are projecting US$ 250 - US$ 300 million in capital to ramp up our yarn-spinning facilities, undertake investments in new textile facilities in Honduras and Costa Rica, and expand our Eden, North Carolina distribution centre.
Published on: 11/04/2015

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of

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