Strength in its print wear business as well as an increase of activewear sales due to colder weather helped Gildan Activewear Inc. deliver robust topline growth for the first quarter.
Earnings, though, declined as expected on acquisition-related costs, as well as a stronger dollar, the company said, adding it expects full-year results to also be affected.
The company said consolidated net sales jumped 15.9 percent to $636.2 million from $548.8 million in the prior year as net income fell 29.2 percent to $56 million, or 23 cents a share, from $79.2 million, or 32 cents a share.
Print wear sales rose 14 percent in the quarter, and the company’s branded apparel segment gain 20 percent. Both sales and earnings for the quarter were in line with analyst expectations.
By way of outlook for the year, management narrowed guidance and said the adjusted diluted earnings per share would be in the range of $1.50 to $1.55, which is down from prior guidance of $1.50 to $1.57. The company said this reflects “the impact of the further devaluation of international currencies relative to the U.S. dollar.”
Net sales for the year are pegged at $2.65 billion.
In its quarterly report, the company said print wear sales “reflected good growth in sales of high-valued activewear products, partially due to seasonally colder weather. In addition, the company is achieving success in its strategy to increase its presence in the fashion basics segment of the U.S. print wear channel, including the repositioning of the Anvil brand and the addition of the Comfort Colors brand.”
Results include one month of sales from Comfort Colors, which the company acquired in early March. “The increase in unit sales volumes in the U.S. print wear market in the quarter also included the impact of anticipated inventory replenishment by U.S. distributors,” the company added.
Despite the sales gain, the company said operating income in the print wear segment dropped 9 percent to $84 million from $92.2 million in the same period last year. “The decline was mainly due to the timing of print wear selling price reductions, which were implemented in advance of anticipated manufacturing cost savings from the company’s yarn-spinning investments and other capital projects, and while the company was still consuming higher-cost cotton in inventories,” the company stated in its report. “In addition, operating margins in the quarter were negatively impacted by the continued decline in international currencies relative to the U.S. dollar.”