(Reuters) — Canadian apparel maker Gildan Activewear Inc forecast a first-quarter loss as it cuts prices in its printwear business to attract more orders from wholesale distributors.
Gildan shares fell as much as 14 percent to C$56.90 in morning trading, making it one of the biggest percentage losers on the Toronto Stock Exchange.
The company’s printwear business sells plain T-shirts, fleece, and sport shirts mainly to wholesale distributors and screen printers in North America, Europe and Asia Pacific.
Gildan also reported a fourth-quarter profit below the average analyst estimate due to lower-than-expected sales of its branded apparel as weak demand forced its retail customers to cut back on orders.
The branded apparel business sells Gold Toe socks mainly to U.S. retailers. It added brands including Secret and Silks, which make pantyhose, through its acquisition of Doris Inc earlier this year. The purchase also gave it brands such as Kushyfoot and TherapyPlus.
The decline in Gildan’s shares were exacerbated by the fact that the company was among the most heavily shorted stocks in North America ahead of earnings this week.
Data from financial services firm Markit indicated that even though the short interest in the stock had declined sharply over the last month, over 10 percent of the stock was out on loan to short-sellers who sell them in the hope that the price will fall, so they can buy them back more cheaply.
Gildan, whose rivals include Hanesbrands Inc and L Brands Inc, forecast a loss of 30 cents per share for the first quarter ending Jan. 4.
Gildan said it expects an adjusted profit of $3.00-$3.15 per share for 2015 on sales of about $2.65 billion.
The company reported a profit of $2.94 per share on revenue of $2.36 billion for 2014.
Raymond James analyst said the earnings forecast was conservative and reflects pricing uncertainty heading into the 2015 back-to-school season.
Net income rose to $122.7 million, or $1 per share, in the fourth quarter ended Oct. 5 from $96.8 million, or 79 cents per share, a year earlier.