• Q3 net earnings edge up 1.5% to $116.1m
  • Net sales of $716.4m flat with the prior year
  • Printwear sales growth of 4.1% offset by 6.9% decline in Branded Apparel

Apparel maker Gildan Activewear has updated its full year guidance thanks to third quarter growth in its Printwear business as well as progress with recently-acquired American Apparel – but continues to face retail industry headwinds in Branded Apparel.

The Montreal, Canada-based company saw net earnings edge up 1.5% to $116.1m in the three months to 1 October, from $114.4m in the same period last year.

Net sales of $716.4m in the quarter were essentially flat compared to the prior year as Printwear sales growth of 4.1% was offset by a 6.9% decline in Branded Apparel sales.

Consolidated gross margin came in at a strong 31.0%, reflecting a 60 basis point increase over the same period last year – with higher net selling prices and favourable product mix in Printwear partly offset by unfavourable product mix in Branded Apparel, as well as higher raw material and other input costs compared to last year's quarter.

Printwear net sales were up 4.1% to $480.7m, with $15.4m from American Apparel, growth in fashion and performance basics, double-digit unit sales volume growth in international markets, and higher net selling prices, partly offset by lower sales of basics.

But net sales for the Branded Apparel segment fell 6.9% year-on-year to $235.7m, which the company attributed to weakness in the sock category, particularly in department stores and national chains, as well as the sporting goods channel, combined with the unfavourable impact from the transition to a new sock program at a mass-retailer.

Lower sock sales in the quarter were partly offset by higher sales of Gildan branded men's underwear and strong performance of activewear.

Looking ahead to the full year, expectations for sales growth have been lowered from the high single digit range to mid to high single digits, on reduced Branded Apparel projections.

But adjusted earnings per share are now seen in the range of $1.70 to $1.72, compared to $1.51 in the prior year and previous guidance at the high end of $1.60-$1.70.