While revenues grew double-digits, Gildan Activewear Inc.’s first-quarter earnings fell on previously-announced price reductions. The company also slightly narrowed its EPS guidance range for the year to reflect further foreign currency devaluation.

Net earnings in the quarter slid 29.3 percent to $56 million, or 23 cents a share. Excluding minor restructuring and acquisition-related costs, adjusted profits were off 27.4 percent to $57.5 million, or 24 cents a share, in line with its guidance calling for earnings in the range of 23 cents to 24 cents a share. The company had warned that profits in the first half of the year would be hurt by planned price reductions in its Printwear segment designed to compete more effectively in the marketplace.

Sales in the quarter jumped 15.9 percent to $636.2 million, reflecting an increase of approximately 14 percent in Printwear sales and sales growth of approximately 20 percent in Branded Apparel. Guidance had called for revenues in excess of $630 million.

Earnings were impacted by lower gross margins in both operating segments, together with increased SG&A and financing expenses, partially offset by lower income taxes

In its Printwear segment, sales grew 13.9 percent to $431.3 million as a result of strong unit volume growth in the U.S. and international Printwear markets and more favorable product-mix. These factors helped offset lower net selling prices, due to the strategic pricing actions that took place on Dec. 4, 2014, as well as the erosion of foreign currencies relative to the U.S. dollar.

“In the US market, we achieved good growth in sales of high valued activewear products, partially due to seasonally colder weather, and increased our penetration in fashion basics, including one month of the impact of the acquisition of Comfort Colors,” said Laurence Sellyn, EVP, CFO and CAO, on a conference call with analysts. The repositioning of the Anvil brand also supported growth in fashion basics.

In addition, sales growth for Printwear benefited from the timing of seasonal inventory replenishment in the U.S. distributor channel, after higher-than-normal seasonal destocking in the December quarter. At the end of the quarter, inventory levels for the Gildan brand in the U.S. distributor channel were at the same level as the prior year.

International Printwear sales were up 25 percent due to continuing penetration in Europe and Asia and the company's recent entry into new markets in Latin America.

Operating income in Printwear declined 8.9 percent to $84.0 million. Operating margins were 19.5 percent compared with 24.4 percent due to the timing of Printwear selling price reductions. The reductions 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. Margins were also impacted by currency fluctuations.

In its Branded Apparel segment, sales grew 20.3 percent to $204.9 million due to organic sales growth of Gildan and Gold Toe branded programs. Sales of Gildan branded products increased 20 percent. During the quarter ended Mar. 31, the Gildan brand remained in the no. 3 position in men's underwear. Sales of Gold Toe branded products increased 12 percent. Gildan and Gold Toe both saw strong growth in activewear.

Growth for the Under Armour and Mossy Oak licensed brands and the acquisition of Doris supported global lifestyle brands and helped offset lower sales of private label programs and the inventory destocking by retail customers.

Operating income in Branded Apparel tumbled 83.5 percent to $2.2 million The drop reflected the primarily attributable to the consumption of high-cost opening inventories, which included the impact of transitional manufacturing costs relating to the integration of new retail products during 2014 and higher cotton costs.

Looking ahead, Gildan narrowed its EPS guidance to a range of $1.50 to $1.55 for the current year, slightly down from its initial guidance of $1.50 to $1.57 a year ago, to reflect the impact of the further devaluation of international currencies relative to the dollar. That compares to $1.47 on an adjusted basis in 2014.

Sales are expected to come in slightly in excess of $2.65 billion, which compares with $2.36 billion a year ago. Printwear sales are expected to climb approximately 12 percent, including the impact of the acquisition of Comfort Colors. Sales growth in Branded Apparel is projected to be in excess of 20 percent.

Adjusted EBITDA is now projected to range between $525 and $540 million for the year. It had expected $525 to $545 million. In 2014, adjusted EBITDA was $468.3 million.

The company is projecting adjusted EPS of 43 to 45 cents a share for the June quarter, on projected revenues of approximately $750 million, compared with adjusted EPS of 47 cents on sales of $693.8 million in the corresponding quarter of the prior year.

Gildan expects to resume its trajectory of EPS growth in the second half of the calendar year, when it begins to benefit from manufacturing cost savings from its yarn-spinning investments and other capital investment projects, and fully benefits from the decline in the cost of cotton.