Gildan Activewear Inc. reported lower third-quarter earnings that beat analysts’ estimates and forecast its market share would rise next year.
This story first appeared in the August 17, 2009 issue of WWD. Subscribe Today.
In the three months ended July 5, profits at the Montreal-based T-shirt firm fell 23.8 percent to $41.5 million, or 34 cents a diluted share, from $54.5 million, or 45 cents a share, in the same period during fiscal 2008.
Excluding a restructuring charge of 3 cents a share and income tax benefit of 5 cents a share, Gildan’s earnings per share totaled 32 cents in the quarter. Analysts polled by Yahoo Finance had expected adjusted EPS of 29 cents.
Third-quarter revenues slid 19.2 percent in the three months to $307.8 million from $380.8 million in 2008.
Laurence Sellyn, executive vice president and chief financial and administrative officer, said on a call with investors that unfavorable product mix, increased promotional wholesale activity and exchange rates contributed to lower sales.
While declining to provide specific sales guidance, Sellyn said the company expects revenues to improve in the coming quarters.
“We are actively working on new retail programs, which we are expecting to have a meaningful impact in our sales growth in 2010 compared to 2009,” Sellyn said.
“What will drive our growth will be our own initiatives in terms of market share in our existing markets, international expansion and our major thrust to go into retail,” he added.
Gross margin in the third quarter fell 220 basis points to 24.4 percent from 26.6 percent a year ago. Sellyn said slight reductions in cotton prices would have a positive effect on margins in the first half of 2010.
In the first three quarters of fiscal 2009, net income at Gildan fell 57.5 percent to $52.9 million, or 44 cents a dilute share, from $124.5 million, or $1.02 a share, a year ago. Year-to-date revenues fell 20.4 percent to $736.6 million from $925 million in 2008.