Canadian apparel maker Gildan Activewear has moved to a loss in its third-quarter after taking a significant hit in demand for its core products in March due to the coronavirus pandemic.
In a trading update for the three months ended 29 March, losses amounted to US$99.3m compared to earnings of $22.7m a year earlier. The company incurred costs related to restructuring, SKU rationalisation and acquisitions.
Gross margin was 23.2%, down from 25.8% in the first quarter last year, while sales fell 26.4% to $459.1m.
While Gildan said it was anticipating a decrease in net sales for the quarter, the volume declines were much higher than expected.
The company has taken a number of steps to try to weather the crisis including closing its manufacturing facilities, producing protective personal equipment (PPE), deferring non-critical capital spend, suspending share repurchases, and reducing pay for senior staff.
It has also extended the shutdown of its manufacturing operations until further notice, but will continue to “assess the need and timing” to resume operations, while following government mandated restrictions, in relation to evolving demand trends and inventory levels.
“Despite this challenging near term situation and uncertain outlook related to the duration of the ongoing impacts from the pandemic, we believe we are well-positioned to deal with this environment for an extended period,” the company added.