The company also reiterated its guidance for full year sales revenues and updated its prior guidance range for adjusted EPS for fiscal 2014. Gildan also announced plans for the construction of a new textile facility in the Rio Nance complex in Honduras.

Third quarter consolidated results

Net sales in the third quarter amounted to $693.8 million, up 12.9% from $614.3 million in the third quarter of fiscal 2013. Adjusted net earnings were unchanged compared to the third quarter of fiscal 2013 and were as projected in the company’s most recent EPS guidance.

The growth in sales in the third quarter reflected double-digit sales increases in both operating segments in spite of uncertain economic and market conditions and constraints in production capacity in Branded Apparel.

The company is currently doubling its underwear capacity to support its planned growth in fiscal 2015. Consolidated gross margins in the third quarter were 28.0% compared to 31.5% in the third quarter of last year, largely due to the transitional manufacturing inefficiencies in Branded Apparel which also included the unanticipated impact of product rework and repackaging costs to service key retail programmes and mitigate the impact of capacity constraints.

Printwear segment

Net sales for the Printwear segment amounted to $483.4 million, up 11.6% from $433.0 million in the third quarter of fiscal 2013.

The increase in Printwear net sales was primarily attributable to increased unit sales volumes, combined with higher net selling prices, including the non-recurrence of a distributor inventory devaluation discount in the third quarter of fiscal 2013 and more favourable activewear product-mix.

Branded Apparel segment

Net sales for Branded Apparel were $210.4 million, up 16.0% from $181.4 million in the third quarter of last year.

Sales in the third quarter of fiscal 2013 included the initial stocking of the Gildan national mass-market underwear programme. Higher Branded Apparel segment net sales reflected sales growth in all product categories, including activewear, underwear and socks, as the company continued to build its brands and gain market share.

Printwear segment

In the third quarter, the Printwear segment reported operating income of $129.7 million, up 8.8% from $119.2 million in the third quarter of fiscal 2013.

Operating margins for Printwear were 26.8% compared with 27.5% in the third quarter of last year as higher net selling prices and more favourable product-mix were more than offset by higher cotton costs and other inflationary cost increases.

Outlook

The company is projecting sales revenues for fiscal 2014 to be slightly in excess of $2.4 billion, including the acquisition of Doris. Sales revenues for Printwear are projected to be slightly in excess of $1.55 billion, up approximately 5.5% compared with fiscal 2013.

Sales revenues for Branded Apparel for fiscal 2014 are projected to be approximately $850 million, up approximately 19% compared with fiscal 2013. The projected sales contribution of $20 million in the fourth quarter of fiscal 2014 from the acquisition of Doris is expected to be offset by the impact of sales lost due to production constraints, primarily in the third quarter.

New textile facility

Gildan has announced plans for the construction of a new textile facility in the Rio Nance complex in Honduras to bridge capacity requirements until the start of the planned facility in Costa Rica.

The new Rio Nance facility will support planned sales growth for higher-valued products, and optimise manufacturing efficiencies at the company’s other textile facilities.

The company intends to proceed with its plans of a new textile facility in Costa Rica which is expected to begin production in fiscal 2017. Gildan is projecting that its overall textile capacity will increase by approximately 40% when production at the new Honduras facility and the company’s planned facility in Costa Rica are fully ramped up, compared with the capacity exit rate at the end of fiscal 2014.

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