Gildan bought American Apparel's assets through a bankruptcy auction.

Gildan Activewear Inc. is already seeing the fruits of its $88 million investment in American Apparel.

The Canadian manufacturer posted consolidated net sales of $665.4 million for the quarter ended April 2, a 12 percent increase over last year, and net earnings of $83.5 million, a 32.1 percent increase, thanks in large part to its recent acquisition of American Apparel.

Sales in Gildan’s printwear segment alone accounted for $445.6 million of the quarter’s sales, up 13.6 percent from a year ago, and American Apparel, along with blank apparel manufacturer Alstyle, made up $39.5 million of that number.

The full integration of American Apparel has also been completed, according to Rhodri Harries, Gildan’s executive vice president, chief financial and administrative officer, who said during a call with analysts that the company “continues to be excited about the opportunities for this brand.”

“Our Made in the U.S.A. supply chain is in place and we have started to ramp up production across our manufacturing system to support overall demand,” Rhodri said. “On the front end, we have integrated all the order-to-cash distribution and marketing functions to support our American Apparel printwear business and we are in the process of assessing how to leverage this brand in e-commerce and retail.”

Overall, Harries said American Apparel “fits perfectly into our sweet spot and we think this one is going to be a big home run for us.”

This is generally in line with comments Harries made while discussing Gildan’s fourth-quarter results, shortly after securing the American Apparel assets earlier this year. Harries also reiterated plans to grow the brand internationally and said that growth should be apparent by early 2018.

It’s not clear whether American Apparel will continue to be manufactured exclusively in the U.S., something that’s been a calling card for the brand since its inception in 1989.

Gildan’s manufacturing facilities are mainly located in Central America and the Caribbean Basin, along with facilities in the U.S., but the company’s chief executive officer Glenn Chamandy told analysts that a lot of growth for the brand is expected to come from Europe and Asia, meaning products would need to be made in “more of the Central America and our regular manufacturing facilities.”

“It depends on where it goes,” Chamandy added. “We’ve got a  lot of flexibility.”

Harries also said he sees American Apparel as “an online business” and that further investments are being made in Gildan’s e-commerce strategy while the strategy for retail is “something that we’ll define over the next couple of months.”

Gildan last year also acquired Alstyle and sock and hosiery company Peds, and said sales from those brands coupled with American Apparel sales should add $160 million to $185 million of organic sales over the year.

Earnings guidance for the year remained unchanged, with the company expecting earnings per share to hit between $1.60 and $1.70, or a median growth of 9 percent, and said earnings growth will be “weighted in the first half of the year” due the cost of materials likely increasing in the latter half. Sales are expected to grow in the high-single digits.

“Despite an environment where we continue to see mixed market conditions including the impact of store closings, we believe our performance during the first-quarter positions us well to deliver on our previous guidance for the full year,” Harries told analysts.

For More WWD News, See:

Kering Sales, LVMH Dior Buy Bolster Luxury Projections

Fashion Players Losing Online Market Share to Innovating Rivals

YNAP Sales Up 15.4% in Q1

Burberry Names Judy Collinson Chief Merchandising Officer

load comments
blog comments powered by Disqus