Gildan is investing in its existing facilities in the US and Honduras

Gildan is investing in its existing facilities in the US and Honduras

Canadian T-shirt and sock maker Gildan Activewear is looking to grow its supply base and expand its relationships with global brands concerned about safety and other social responsibility issues at sub-contractors making their clothes. 

"These brands are increasingly seeking to consolidate their sourcing with large-scale, strategically located vertical suppliers with solid financing, which can be trusted not to compromise their corporate values and brand image with consumers," said Gildan's chief financial and administrative officer and EVP Laurence Sellyn.

Speaking to analysts after the company more than doubled its second-quarter profit, he added: "It goes without saying that the succession of recent events has increasingly given brands which outsource their manufacturing...reason to become concerned about safety and other social responsibility issues at contractor facilities."

"In addition, brands have been impacted by costly product recalls and by servicing issues, which one major brand called out last week as a key criteria for its supply chain decision-making, going forward," added Sellyn. 

The comments come after the collapse of eight-storey factory complex in Rana Plaza, Bangladesh, last month, which has so far killed more than 900 people. Primark and Joe Fresh confirmed their garments were being manufactured in one of the factories that collapsed.

He also stressed the importance of large-scale vertical manufacturing in the firm's printwear and branded apparel businesses, which saw second-quarter sales rise 2% and 27.4% respectively.

The company is also investing in its existing facilities in the US and Honduras to expand production capacity.

Gildan said its investments in product technology and production capacity over the last 15 years has given it a competitive advantage as a low-cost producer and a supplier of consistent, high-quality products made in superior working conditions.

Under its fiscal 2013 capital expenditure programme, Gildan intends to spend US$10m on modernising the former Anvil textile manufacturing plant and further expand its product capabilities.

Founder, president and CEO, Glenn Chamandy, said the Anvil facility will focus on performance-type and specialty fabrics, including stretch fabric. 

The group plans to build a new distribution centre in Honduras and begin the ramp- up of its Rio Nance I facility in the fourth quarter, with a focus on ring-spun products. 

"When we bring on Rio Nance I, we'll be looking at approximately...100m dozens of capacity," Chamandy added.

In addition, Gildan plans to spend $85m on upgrading its two yarn-spinning facilities and on a new ring-spun yarn plant in North Carolina, which is expected to be completed in fiscal 2014.

"Our continuing investments in our textile manufacturing and our strategy to increase vertical integration in yarn-spinning will further reinforce our low-cost manufacturing and provide further differentiation in product quality," Sellyn emphasised.

When asked about new acquisitions, Sellyn said "the world's full of opportunities", while adding that the company is "in no rush to rush out and do acquisitions. We don't mind having cash accumulate in our balance sheet for a while". 

"So we're comfortable with the right opportunity. But yes, we think there are plenty of good opportunities out there," he stressed.  

The company lifted its full-year outlook on Thursday (2 May) after more than doubling its second-quarter net profit to $72.3m, thanks to low cotton prices and higher sales.

Gildan now expects full-year adjusted earnings per share to reach $2.65-$2.70, which is at the upper end of its earlier guidance of $2.60-$2.70. Sales revenues are forecast to be slightly in excess of $2.15bn.