Third quarter sales at Gildan Activewear Inc. reached 602 million dollars, down 18.6 percent, but up sequentially from 230 million dollars in the second quarter this year and the company returned to a profit with GAAP diluted EPS of 28 cents and adjusted diluted EPS of 30 cents. From a sales perspective, point of sales (POS) levels in the imprintables channel, although down on a year-over-year basis, remained relatively stable through the third quarter, while sales to retailers were up year-over-year. Gross margin totalled 22.5 percent.
“We were pleased with the recovery of our sales and earnings during the third quarter. Retail sales performance was driven by momentum in underwear, and while the lack of large events continues to impact imprintable channels we are nonetheless seeing areas of opportunity,” said Gildan President and CEO, Glenn J. Chamandy in a statement.
Review of Gildan Activewear’s third quarter results
Total sales comprised of activewear sales of 456 million dollars, down 26.3 percent from the prior year, and strong sales growth in the hosiery and underwear category, where the company generated 146 million dollars of sales, up 21.2 percent compared to the third quarter of 2019. The company added that decline in activewear sales was primarily driven by lower unit sales volumes, unfavourable product-mix, and higher promotional discounting in the imprintables channel.
Imprintables sales volumes were down 21 percent in North America and 25 percent in the international markets, reflecting the ongoing impact from the Covid-19 pandemic, while overall POS trends in imprintables channels remained relatively stable through the third quarter, on average down year-over-year approximately 15 percent to 20 percent in North America and approximately 25 percent in international markets. On the retail side, activewear sales were down slightly compared to last year, while sales of hosiery and underwear were up 21 percent.
Highlights of the nine months results at Gildan Activewear
The company further said that net sales for the nine months ended September 27, 2020 of 1,291.1 million dollars were down 40.4 percent over the same period last year, reflecting declines of 46 percent in activewear sales and 14.6 percent in the hosiery and underwear category. The decrease in activewear sales where the company generated sales of 960.5 million dollars was primarily due to lower unit sales due to the downturn in demand as a result of the Covid-19 pandemic combined with the impact of distributor inventory destocking in imprintables, unfavourable product-mix, and the impact of pricing action taken in the U.S. imprintables channel.
Sales in the hosiery and underwear category of 330.6 million dollars on a year-to-date basis also reflected the Covid-related impact on demand in retail channels of distribution, specifically lower demand in socks, as well as the impact of the exit of a sock program in the mass channel, partly offset by a 50 percent increase in private brand men’s underwear sales.
The company generated gross profit of 93.6 million dollars and 127.6 million dollars on an adjusted basis compared to 586.2 million dollars for the same period last year.