ATLANTA — While Gildan Activewear Inc. doubled its diluted earnings per share in the second quarter ended March 30, the Montreal-based company fell 8 cents short of its guidance provided on Jan. 30, which it blamed on retail integration issues and lower than expected unit sales growth in activewear.
Net income in the quarter nearly doubled to $41.7 million in U.S. dollars, or 34 cents per diluted share, from $21.1 million, or 17 cents per diluted share in the second quarter of 2007. Results for the quarter included various charges, including $800,000 to reflect ongoing carrying costs for Canadian and U.S. manufacturing facilities.
The growth in earnings per share, Gildan said, was due to more favorable unit sales volume, selling prices and product mix for activewear.
Sales increased 26.5 percent to $293.8 million from $232.1 million. The rise in sales revenue was due to an increase of 98.4 percent in sock sales because of the acquisition of V.I. Prewett & Son last year and new retail sock programs obtained in fiscal 2007, a 7.5 percent increase in unit volumes for activewear, an approximately 3 percent increase in activewear unit selling prices, and a more favorable activewear product mix.
Growth in activewear unit volume was constrained by lower than anticipated production, including delays in the introduction of new high-value ring-spun T-shirt and sport shirt products at Gildan’s textile facility in the Dominican Republic.
Gildan credited its growth in activewear unit sales to continuing market share penetration in fleece and T-shirts in the U.S. wholesale distributor channel. The company said it achieved record market shares in the two categories during the second quarter of fiscal 2008.
Gildan has lowered its adjusted diluted earnings per share guidance for the full year to a range of $1.45 to $1.50 from its previous projection of $1.85 to $1.90. Net earnings in fiscal 2007 were $1.29 per share.