Canada's Gildan Activewear's sales up 2% to $870 million in Q3 FY23

The company saw flat sales in its activewear sector during the quarter despite a positive point-of-sale (POS) outcome YoY. International sales, however, fell short of expectations with a 23 per cent decline in sales compared to the same quarter last year, affected by lower demand and pricing pressures.

Conversely, the hosiery and underwear category displayed a promising increase, with sales climbing 16 per cent versus the previous year, Gildan Activewear said in a press release.

Gross profit stood at $239 million, or 27.5 per cent of sales, which is a decrease of $13 million and 220 basis points from the prior year. The contraction in gross margin was mainly due to increased costs for raw materials and manufacturing inputs, as well as slight dips in net selling prices. Nevertheless, Gildan noted a sequential gross margin improvement of 170 basis points over the third quarter, as the impact from high cotton costs in the first half of the year began to diminish.

The company's selling, general, and administrative expenses remained steady at $82 million. However, due to the sales growth, selling, general, and administrative expenses as a percentage of sales saw a marginal reduction of 20 basis points, coming in at 9.5 per cent, reflecting the benefit of sales leverage.

Operating income for the quarter was reported at $155 million, or 17.8 per cent of sales, with adjusted operating income slightly higher at $157 million, or 18.1 per cent of sales. These figures represent a respective drop of 270 and 190 basis points compared to the previous year, primarily reflecting the decreased gross margin.

The company's GAAP diluted EPS and adjusted diluted EPS were both lower than the previous year at $0.73 and $0.74, respectively, down from $0.84.

For the first nine months of FY23, Gildan's net sales fell 4 per cent to $2,413 million against the prior year, influenced by a 7 per cent decrease in activewear sales, partially mitigated by a 10 per cent rise in the hosiery and underwear category. Gross profit for the nine-month period was down $114 million from the previous year, with operating income at $466 million, equating to 19.3 per cent of sales. The company's GAAP diluted EPS and adjusted diluted EPS were reported at $2.14 and $1.82, respectively, both showing a decrease from the $2.46 reported in the prior year.

"Our competitive position remains very strong in a challenging environment driven by our industry-leading vertically integrated manufacturing platform. We delivered third quarter performance which came in overall in line with our expectations.  We resumed our sales growth trajectory and delivered operating margin within our target range” said Glenn J Chamandy, Gildan’s president and CEO.

Fibre2Fashion News Desk (DP)