• Q2 profit a record US$49.8m
  • Sales up 33.5% to US$326.8m
  • Raises guidance for the year

A strong recovery in its activewear and underwear sales has helped Gildan Activewear Inc to a nearly six-fold hike in second quarter profit, leading it to raise its guidance for the year.

The Montreal-based firm now expects sales of $1.3bn for the full-year, $100m more than previously forecast and 25% higher than the prior year.

Sales will be helped, it says, by higher screenprint and retail market volumes and better activewear selling prices - which will also contribute to a 27% rise in gross margins.

Gildan also says it is building its private label business, with a new family fleece programme at a major national discount retailer and activewear programmes for three other retailers.

The forecasts were raised after net earnings reached a second-quarter record of US$49.8m or US$0.41 per share - including a restructuring charge of $0.01 per share related to the consolidation of its US distribution activities.

This compares with a profit of $7.2m or $0.06 per share a year ago

Higher sales volumes, cheaper manufacturing, cotton and energy costs more than offset the impact of the Haiti earthquake and higher selling, general and administrative expenses.

Quarterly net sales were up 33.5% to US$326.8m, from $244.8m a year earlier.

But while activewear and underwear revenues jumped 51% to $273.2m, sock sales were down 16.3% to $53.6m - although replenishment and new programs for mass-market retailers are expected to benefit sock shipments in the second half of the year.

Consolidated gross margins jumped to 27.8% from 15.8%, benefiting from manufacturing efficiencies, lower cotton and energy costs and a more favourable activewear product-mix.