Gildan Activewear Inc. increased its second-quarter profits at a nearly double-digit pace despite higher cotton costs that drove down its gross margin.
The Montreal-based knitwear and underwear firm also said that it will build a new textile facility in the province of Guanacaste in northwestern Costa Rica, close to its sewing plants in Nicaragua and positioned to allow for duty- and quota-free access to the major markets it serves in the U.S.
In the quarter ended March 30, net income expanded 9.5 percent to $79.2 million, or 64 cents a diluted share, from profits of $72.3 million, or 59 cents, in the year-ago quarter.
Revenues rose 4.9 percent, to $548.8 million from $523 million, as printwear sales were up 2.9 percent to $378.5 million and branded apparel expanded 9.9 percent to $170.3 million.
The firm fell just short of analysts’ consensus estimates for revenues of $555.2 million while beating earnings per share estimates of 63 cents.
Gross margin dropped to 27.9 percent of sales from 28.9 percent in the second quarter of 2013 “as the impact of higher cotton costs compared to last year was only partially passed through into higher net selling prices in printwear, and selling prices for branded apparel were not increased,” the company said.
In a conference call to discuss the results, Glenn Chamandy, president and chief executive officer, said the company would have more details on its Costa Rica textile facility when it reports third-quarter results in August. “The plan is for us to start construction in 2014 and then obviously bring the facility on sometime in 2016,” he said.
“We need to bring incremental capacity on prior to Costa Rica.... We need to have installed capacity in 2015 to support our growth for 2016 on the momentum we have,” he added.
Gildan said in September that it would spend more than $200 million this year and in 2015 for the construction and ramp-up of two new yarn-spinning facilities in the southern U.S. in addition to a ring-spun yarn-manufacturing facility in Salisbury, N.C., and the modernization of open-end spinning facilities in Clarkton, N.C., and Cedartown, Ga.
Gildan expects capital expenditures this year to total between $300 million and $350 million, with about half dedicated to the new yarn-spinning capacity, according to Laurence Sellyn, chief financial and administrative officer. The firm is also investing in several of its existing facilities in Central America.
Sellyn will retire from Gildan at the end of the year after more than 15 years as cfo. The company expects his successor to be appointed prior to his departure.
In the first six months of the year, Gildan’s net income increased 12.4 percent, to $120.9 million, or 98 cents a diluted share, while revenues grew 6 percent to $1 billion.
The company maintained its guidance for full-year adjusted EPS of between $3 and $3.10 a diluted share but raised revenue expectations to about $1.55 billion, up from $1.5 billion previously projected.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast