Gildan Activewear, Inc., said a strong recovery in Activewear and Underwear provided a boost for the companys first quarter of fiscal 2010 and propelled its top line and earnings to double-digit growth. Specifically, management at the Montreal-based clothing manufacturer said the primary growth driver was Activewear unit sales, which surged 31.5% due to higher market share in the U.S. wholesale distributor channel; lower seasonal inventory de-stocking by distributors; and increased penetration of international and other screenprint markets.
Consolidated revenues for Gildan in the first quarter were up 19.8% to $220.4 million from $184.0 million in the prior-year period, while earnings before charges jumped more than five-fold to $29.2 million, or 24 cents per share, from $5.3 million, or 4 cents per share, in Q1 last year. In a conference call with analysts, management attributed EPS growth to the strength in Activewear unit sales, gains in manufacturing efficiencies, lower cotton and energy costs and a more favorable product mix.
By segment, sales of Activewear and Underwear increased 32% while Socks remained flat. The company said market share for all product categories in the U.S. distributor channel improved to 61.3% compared to 57.1% a year ago, based on the S.T.A.R.S Report .
Consolidated gross margins were 29.8%, up from 21.1% in Q4 last year, partially offset by lower selling process for activewear and the impact of additional inventory provisions.
Looking ahead, Gildan reconfirmed its original fiscal year projections, estimating sales in fiscal 2010 to be in excess of $1.2 billion, up about 17% from 2009, and gross margins to be about 26% for the year.
