Montreal-based Gildan Activewear Inc has generated record third quarter (Q3) sales of US$ 850 million, up six per cent year-over-year. Activewear sales to North American imprintable distributors held up well in the quarter ending October 2, 2022, driven by higher net selling prices and sales volumes, resulting in strong operating margin of 20.5 per cent.
In the hosiery and underwear category, the sales decline compared to last year was driven by weak demand in retail and the impact of retailers managing their inventory levels. The company generated gross and adjusted gross profit of $252 million in the quarter, down $30 million from gross profit of $282 million last year. After adjusting for the benefit of a net insurance gain of approximately $30 million recorded in the third quarter of 2021, adjusted gross profit was flat year over year, as the sales growth in the quarter was offset by lower gross and adjusted gross margin compared to last year.
“The strength of our activewear business, driven by North American imprintables sales, together with the benefits from our vertically-integrated manufacturing model, allowed us to deliver another strong quarter,” said Glenn J Chamandy, Gildan’s president and CEO. “These results are a testament to the progress we are making under the Gildan Sustainable Growth strategy, which we remain fully focused on as we continue to drive to deliver on our three-year targets.”
Net sales for the nine months ended October 2, 2022, were $2,520 million, up 18 per cent over the same period last year, reflecting an increase of 25 per cent in activewear sales, partly offset by a decline of 12 per cent in the hosiery and underwear category. The year-over-year increase in activewear sales, which generated sales of $2,167 million, was primarily driven by higher net selling prices, higher unit sales volumes and favourable product-mix.
For the first nine months of 2022, the company generated gross profit of $758 million, or 30.1 per cent of sales compared to gross profit of $711 million, or 33.3 per cent of sales for the same period last year. On an adjusted basis, gross profit totalled $756 million, or 30.0 per cent of sales compared to adjusted gross profit of $663 million, or 31.0 per cent of sales in the same period last year. The $47 million and $93 million increase in gross and adjusted gross profit, respectively, was primarily driven by the 18 per cent growth in sales, partly offset by gross and adjusted gross margin declines of 320 and 100 basis points, respectively, compared to the same period last year.
Commenting about the outlook for the near future, the company said that although the impact of higher raw material costs will become more pronounced in the fourth quarter, it remains focused on delivering on its operating profitability target range of 18-20 per cent. “More importantly, our proven operational excellence in both good and tough environments as well as the progress we continue to make on the key pillars of our sustainable growth strategy, gives us confidence in our ability to deliver on our three-year growth targets outlined in February of this year,” the company said in its result.
Fibre2Fashion News Desk (RKS)