Gildan Activewear has announced record adjusted net earnings of US $0.35 per share for the first quarter of a fiscal year, which is seasonally the lowest sales quarter for T-shirts in the fiscal year.

The company also reconfirmed its prior guidance for the full 2014 fiscal year for EPS, sales revenues, capital expenditures and free cash flows.

Growth in first quarter

Net earnings were US $41.7 million for the first fiscal quarter that ended 29 December 2013, compared with net earnings of US $35.3 million for the first quarter of fiscal 2013. Net sales in the first quarter amounted to US $451.4 million, up 7.3% from US $420.8 million in the first quarter of fiscal 2013.

Net sales for the Printwear segment amounted to US $261.8 million, up 7.4% from US $243.7 million in the first quarter of fiscal 2013. The increase in Printwear sales volumes was realised in spite of increased seasonal destocking by wholesale distributors.

Net sales for Branded Apparel were US $189.6 million, up 7.1% comparing to the first quarter of last year. The growth in sales for the Branded Apparel segment was primarily due to continuing strong consumer demand for Gildan branded underwear.

Lower financial expenses

Results for the first quarter of fiscal 2014 were also impacted by lower financial expenses and higher income taxes. The effective income tax rate in the first quarter, excluding the impact of restructuring and acquisition-related costs, was approximately 5.7% compared with 4.4% in the first quarter of fiscal 2013.

In the first quarter, the Printwear segment reported operating income of US $48.3 million, up 5.2% from US $45.9 million in the first quarter of fiscal 2013. The Branded Apparel segment reported quarterly operating income of US $21.9 million, up 11.7% from US $19.6 million in the first quarter of fiscal 2013.

Outlook

The company is assuming higher cotton costs than previously projected in the second half of the fiscal year, due to the recent rise in cotton futures prices, as well as further inflationary cost increases. However, these factors are forecast to be offset by slightly higher net selling prices.

The company continues to expect that the selection of the site for its new large-scale textile facility in Central America will be finalised before the end of the second fiscal quarter. The new ring-spun yarn-spinning facility being constructed in Salisbury, NC, is expected to begin its production ramp-up in the second fiscal quarter.

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