Gildan Activewear Inc. reported a 26.3% jump in second quarter net sales to $232.1 million from $183.8 million in the second quarter of last year, but restructuring charges caused net income to fall. The increase in sales revenues was due to $32.8 million of sock sales from Kentucky Derby Hosiery and an 11.2% increase in unit sales volumes for activewear.
According to the S.T.A.R.S. report, for the fiscal second quarter, GIL saw an increase in overall market share that was fueled by gains in T-Shirts, Fleece and Sport Shirts. The company also saw unit growth in each of the categories, while the overall industry posted slight declines, except for fleece, which saw unit growth of 11.5% while GIL was up just under 60%. All told, Gildan saw a 47.4% market share for the quarter, with T-shirts share at 48.2%, Fleece at 42.5%, and Sport Shirts at 35.7%. Gildan's activewear division saw particularly strong sales in Europe, up 34% compared to Q2 last year.
Gross margins in the second quarter of fiscal 2007 were 33.9%, up 50 basis points from 33.4% in the second quarter of fiscal 2006. SG&A expenses in the second quarter were 12.3% of sales, increasing 100 basis points from 11.3% of sales in the second quarter of last year, due to the impact of the acquisition of Kentucky Derby Hosiery, amongst other factors.
Gildan reported Q2 net earnings of $21.1 million or diluted EPS of 35 cents, down 31.8% from $31.0 million or diluted EPS of 51 cents last year. The steep decline came from a restructuring charge of $16.4 million after-tax or 27 cents per share, due to the restructuring of the company's Canadian and Mexican manufacturing facilities. Excluding the charge, earnings were $37.5 million or 62 cents, up respectively 21.0% and 21.6% from net earnings of $31.0 million and diluted EPS of 51 cents in the second quarter of fiscal 2006. The company maintained previous EPS guidance of $2.20 for the full year.
Finally, the company announced a 2-for-1 stock split that will occur on May 16 on the TSX and May 28 on the NYSE.
