For the three months ended Dec. 31, Gildan Activewear Inc. said income was $35.9 million, or 29 cents a diluted share, from $28 million, or 23 cents, a year ago. Excluding restructuring costs, adjusted income was $36.6 million, or 30 cents a diluted share, from $29.2 million, or 24 cents, last year.
Sales for the quarter rose 50.3 percent to $331.3 million from $220.4 million. Sales of activewear and underwear in the quarter rose 76.7 percent to $270.1 million, while sales of socks were down 9.3 percent to $61.2 million.
The company said growth in earnings was due to an increase in revenues for activewear. However, the growth was partially offset by higher cotton costs and start-up inefficiencies in its new retail distribution center in Charleston, S.C., which impacted the company’s ability to service sales demand for socks during the Christmas holiday season.
Gildan said price increases have been agreed to with its retail customers, and that it previously announced an average 7 percent in the screenprint market last month, but that if cotton prices “do not correct significantly from current levels,” the firm would seek further price increases in the second half of the year. Price increases so far have been based on $1.25 per pound for cotton, executives said on a call to Wall Street analysts.
The company also said that the benefit of selling price increases is forecasted to be offset by the impact of higher than previously projected cotton cost increases in the second half of the fiscal year, and in part by the reduced manufacturing and distribution efficiencies.
Gildan projected sales revenues of $1.6 billion for fiscal year 2011, and $375 million for the second quarter.