Canadian apparel maker Gildan Activewear has moved to a loss in its second-quarter weighed down by lower sales volumes during the Covid-19 pandemic.

For the three months ended 28 June, sales slumped 71.3% to US$229.7m as a result of the demand downturn in the quarter, the impact of significant distributor inventory destocking, unfavourable product-mix, and higher promotional discounting in imprintables.

Activewear sales tumbled 80.2% to $131.6m, stemming primarily from lower sales volumes of imprintables, which were down 75% in North America and around 55% internationally.

Losses in the period amounted to $249.7m, compared with earnings of $99.7m a year earlier.

“Despite the impact of the Covid-19 pandemic, we maintained a strong focus on our key priorities, including the health and safety of our employees and the long term positioning of our business,” said CEO Glenn Chamandy. “Against the challenging backdrop of the pandemic and the difficult but necessary actions we have taken, we have accelerated efforts under our Back to Basics strategy to further simplify our product portfolios, remove complexity and cost from our business, better support our customers and drive long term market share growth.”

For the first six months of the year, net sales were down 51.7% to $688.8m, reflecting declines of 56.5% in activewear and 30.7% in the hosiery and underwear category.

Gildan reported a first-half net loss of $349m from earnings of $122.4m in the same period a year earlier. Lower unit sales volumes, unabsorbed fixed manufacturing costs while capacity was idle, inventory provisions, as well as the impact of exiting excess commodity derivative hedges and cotton commitments, were to blame – all of which were triggered by the pandemic.

The company said it was encouraged by certain signs of recovery, as imprintables distributor customer warehouses and brick and mortar stores started to re-opened in the US. It singled out men’s underwear and activewear as the best-performing products.

“We are encouraged by our retail sales thus far in the third quarter, which are tracking slightly ahead of prior year levels. POS in the mass and on-line channels continue to perform in the strong double-digit range driving this improvement, while POS within certain mid-tier retailers such as department stores, national chains and sports specialty are still down in the 20% to 30% range compared to prior year levels.”