Gildan has focused primarily on basic tops. Here, spring looks for men and women.

Gildan Activewear Inc. said it was acquiring Alstyle Apparel LLC from Ennis Inc., for a total cash price of $110 million.

Alstyle manufactures and markets activewear T-shirts and fleece. The acquisition will expand Gildan’s penetration in printwear markets and allow Gildan to be more competitive in the Mexican printwear and retail markets.

Alstyle generated sales revenues of $183 million for the fiscal year ending February 2016 and should be slightly accretive to Gildan’s earnings per share for 2016.

Ennis had initially agreed to sell Alstyle to Alstyle Operations LLC for $88 million. The bid from Gildan was not matched and so Ennis paid $3 million as part of the termination fee.

Separately, Gildan reported its first-quarter earnings that missed analysts’ expectations for earnings and sales.

Net earnings for the quarter ending April 3 totaled $63.2 million, or 26 cents a diluted share, up from $56.0 million, or 23 cents, a year ago. Adjusted earnings per share totaled 28 cents and missed the FactSet estimate for 36 cents a share.

The decline in consolidated sales was due to the unfavorable impact of lower distributor inventory replenishment and the company’s decision to exit certain private-label programs.

Consolidated net sales in the first quarter were $593.3 million, a decline of 6.7 percent from last year’s $636 million, which missed the FactSet estimate of $785 million. Gildan delivered gross margins that were 440 basis points higher than last year reflecting manufacturing cost savings.

Gildan said the first quarter is typically when cash is used to build seasonal working capital. Gildan burned through $58.4 million in free cash flow, which was still less than last year’s $108 million. The savings were due to lower yarn-spinning investments.

Looking ahead for the full year of 2016, Gildan continues to project adjusted diluted earnings per share to be in the range of $1.50 to $1.60. Net sales are forecast to be in excess of $2.6 million. The guidance doesn’t reflect the Alstyle acquisition.

load comments
blog comments powered by Disqus