The company generated strong earnings per share growth during the third quarter, with EPS of $0.52 and adjusted EPS of $0.53, up 6 per cent compared to the prior year. "Stronger than expected adjusted EPS was due to more favourable product mix in printwear, earnings contribution from the impact of the American apparel transaction, and lower income taxes, partly offset by lower than expected branded apparel sales, reflecting the continuation of a challenging retail market," the company said in a press release.
Consolidated net sales of $716.4 million in the third quarter ended October 1, 2017, were essentially flat compared to the prior year as printwear sales growth of 4.1 per cent was offset by 6.9 per cent decline in branded apparel sales compared to the third quarter of last year. Consolidated SG&A expenses as a percentage of sales were 13.2 per cent in the third quarter compared to 12.1 per cent in the same quarter last year, primarily due to the impact of the American apparel acquisition. The company generated a strong adjusted operating margin for the quarter of 17.8 per cent, slightly down from 18.3 per cent in the prior year quarter.
Consolidated net sales growth for the full year is now projected to be in the mid to high single digit range compared to the company's previous estimate of high single digit net sales growth. The company continues to expect strong full year printwear net sales growth in the high single digit range, while it is now projecting branded apparel net sales growth in the low single digit range versus its previous projection of high single digit growth, given current retail market conditions.
Due to stronger adjusted EPS, the company has expected adjusted diluted EPS for the full year to be in the range of $1.70-$1.72, up 13 per cent at the mid-point of the range compared to adjusted EPS of $1.51 in the prior year. The company also updated its expectation for adjusted EBITDA for 2017 to be in the range of $580 -$590 million, up from its prior estimate of adjusted EBITDA at the high end of the $555-$585 million guidance range. Full year capital expenditures are projected to be approximately $100 million. Free cash flow is expected in excess of $450 million for the year compared to its previous estimate of in excess of $425 million. (RR)
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