Apparel maker Gildan Activewear expects sales from American Apparel to double to US$100m in 2018 – less than two years after acquiring the brand – and says it has merged its Printwear and Branded Apparel businesses.
The announcements came as the Montreal, Canada-based company saw net earnings tumble 26.1% to US$54.9m in the three months to 31 December, compared with $74.3m in the year-ago period.
Consolidated net sales of $653.7m for the period increased 11.2% compared to $587.9m last year, reflecting a 27.6% hike in the Printwear segment, including the impact of the acquisition of American Apparel, but partly offset by a decline of 9.2% in Branded Apparel.
Consolidated gross margin increased 40 basis points to 27.1% compared to the prior year quarter, with higher net selling prices and favourable product mix in Printwear, but an unfavourable product mix in Branded Apparel, as well as higher raw material costs. Gross margin was also hit by manufacturing expenses of about $6m, or 95 basis points, resulting from temporary production interruptions during the recent election in Honduras.
Meanwhile, Gildan revealed it has combined its Printwear and Branded Apparel businesses into one consolidated divisional operating structure. The move took place at the beginning of January, and is designed to centralise marketing, merchandising, sales, distribution, and administrative functions.
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The combined organisation will be led by Michael Hoffman, president, sales, marketing and distribution, who was previously serving as president of Printwear.
Eric Lehman, previously president of Branded Apparel announced he will leave the business to pursue other opportunities at the end of June.
In the fourth quarter, Printwear net sales were up 27.6% to $415.6m, helped by a $16.6m boost from American Apparel.
Net sales for the Branded Apparel segment, meanwhile, fell 9.2% year-on-year to $238.1m, which the company attributed to lower unit sales volumes of socks and activewear, unfavourable product mix driven by a lower proportion of sales of higher-priced socks and activewear, and the exit of certain private label programmes.
For the full year, net earnings were up 4.5% to $362.3m, from $346.6m last time. Consolidated net sales were up 6.4% and in line with company guidance at $2.75bn, helped by a 10.4% increase in Printwear sales but a decline of 0.6% for Branded Apparel.
Looking ahead, Gildan’s guidance for 2018 sees EPS in the range of $1.80 to $1.90, the mid-point of which represents growth of about 7.5% over 2017, on projected net sales growth in the low to mid-single-digit range.
American Apparel
Speaking to analysts on the firm’s fourth-quarter earnings call, CFO Rhodri Harries said the anticipated sales gains at American Apparel come after the company ramped up production within its own manufacturing operations and re-launched the brand to US consumers through its e-commerce platform.
“In 2018, we plan on continuing to take the brand further by expanding internationally including a Printwear direct-to-consumer launch in the European market by the end of the first quarter of 2018 and growing placement on online marketplaces globally,” he added.
Last week, Gildan revealed it is making its full assortment of men’s underwear styles available on Amazon for the first time.
Gildan men’s underwear available on Amazon
