Basic apparel maker Gildan Activewear has shrugged off the pandemic and back to back hurricanes in Central America to book higher sales and earnings in its fourth quarter – helped by high demand for activewear during the pandemic.
The company, which makes activewear, underwear, socks, hosiery, and legwear products for customers including wholesale distributors, screenprinters, embellishers and retailers, saw sales for the three months to 3 January climb to $690.2m, up 4.8% on the same period a year earlier.
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Activewear sales rose 11.3% to $537.9m, but sales of hosiery and underwear slipped 13.0% to $152.3m. Activewear growth was boosted by higher imprintables and retail demand in North America, partly offset by lower international shipments.
Sock sales were hit by the pandemic, particularly within national chains and department stores, as well as sports specialty channels. But underwear sales jumped 20% in the quarter, significantly outpacing industry demand and reflecting continued market share gains for the company’s private label men’s underwear programme and its own branded underwear products.
Reported gross margin rose to 22.5% from 17.9% a year earlier, helped by a stronger imprintables product-mix, lower raw material costs, and manufacturing efficiencies from the firm’s Back to Basics initiatives.
During the fourth quarter, Back to Basics efforts saw a retail SKU rationalisation and the discontinuing of personal protective equipment (PPE) SKUs.
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By GlobalDataGildan owns and operates vertically-integrated, large-scale manufacturing facilities in Central America, the Caribbean Basin, North America, and Bangladesh. Production was temporarily suspended at its Rio Nance complex and at other locations in Honduras and Nicaragua in November and part of December after being hit by two hurricanes.
For the full year, net sales fell 29.8% to $1,981.3m from the prior year, reflecting declines of 33.8% in activewear and 14.1% in the hosiery and underwear category.
Gross profit tumbled to $249.1m from $704.5, triggered by lower unit sales volumes during the pandemic, manufacturing costs while capacity was idle, inventory provisions, and the impact of exiting excess commodity derivative hedges and cotton commitments. Net loss for 2020 was $225.3m from earnings of $259.8m the year before.
Looking ahead, Gildan says imprintables POS is currently tracking slightly weaker than during the fourth quarter, down 10% to 15% in the US and international markets compared to 2019 levels, due to the impact of renewed winter lockdowns. In retail, it continues to see year-over-year growth in our activewear and underwear sales, but sales in the sock category are down year-over-year.
The company expects to resume investments in 2021, including its major capacity expansion project in Bangladesh.
