Gildan president and CEO Glenn J. Chamandy explains Q2 sales were driven by better than expected sales volume in activewear which offset weaker-than-expected product mix in this category.
For the second quarter ended 2 July 2023, Gildan’s operating income increased 5% to $182.7m this quarter from $174m in the prior year.
This includes a net insurance gain of $74.2m related to the two hurricanes which impacted the company’s operations in Central America in 2020, partly offset by restructuring charges of $30m which included the closure of a sewing facility in Honduras.
Net earnings were down by 1.8% to $155.3m from $158.2m a year prior.
Gildan believes its vertically integrated model, competitive cost structure, leadership in pricing, product availability, and strength in sustainability are enabling the company to grow market share in key product categories and outperform its peers.
Gildan Activewear revised outlook
Gildan has lowered its outlook to have revenues for the full year flat to down low single digits, compared to its previous expectations of a low single digit year-over-year increase.
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Its full year adjusted operating margin will be slightly below the low end of its current 18% to 20% annual target range.
Gildan explains the strong comparative periods are now over so the company expects revenues to grow in the second half of the year supported by the planned roll-out of incremental retail programmes.
However, the company points out: “Despite continued market share gains, we are seeing current market conditions unfavourably impact activewear product mix, both in North American and International markets, as customers focus on lower-priced products. Combined with near-term uncertainty related to the macro-environment, we believe it is prudent to temper our previous FY 2023 expectations for revenue growth and operating margins.”