Gildan Activewear Inc. reported sales in its fiscal first quarter of $185.8 million, up 54.4% from $120.3 million in the first quarter of last year. The increase in sales revenues was due to $42.6 million of sock sales resulting from the acquisition of Kentucky Derby Hosiery and a 15.2% increase in unit sales volumes for activewear. Excluding the acquisition boost, organic sales increased 19.0% over the same quarter last year.

Gross margins for the period decreased 670 basis points to 29.0% of sales from 35.7% last year, with management attributing the decrease to lower margin sales of socks, which it anticipates to be alleviated in the future through the Kentucky Derby Hosiery acquisition.

The company posted net earnings of $15.6 million, or 26 cents diluted earnings per share, for the fiscal first quarter ended December 31, after recording charges related to the restructuring of its Canadian manufacturing facilities totaling $1.4 million after-tax, or two cents per share. Due to the charges, Gildan saw net income slip 3.7% from $16.2 million, or 27 cents per diluted share, in the year-ago quarter. The company noted that the Kentucky Derby acquisition was accretive to earnings in the quarter by a penny per share.

Gildan has reiterated its full year diluted EPS guidance of approximately $2.55 on $975 million in sales. Before restructuring charges, adjusted diluted EPS for fiscal 2007 is projected to be approximately $2.61. GIL expects adjusted diluted EPS before restructuring charges for the second quarter to increase approximately 20% over last year’s quarter to approximately 61 cents per share.

Gildan is accelerating the installation of equipment and the ramp-up of its two major capacity expansion projects in Honduras, and is increasing its planned capital expenditures in fiscal 2007 to approximately $145 million, compared to its previous projection of $110 million. On a conference call with analysts, management said that it expected to increase its production capabilities “from 17 million dozens capacity…in year 2007 to over approximately 95 million dozens” by the end of the 2009.