May 3, 2023 – Gildan Activewear Inc. (GIL: TSX and NYSE) announced results for the first quarter ended April 2, 2023.
“We are pleased with our top line results having met our sales expectations for the quarter” said Glenn J. Chamandy, Gildan’s President and CEO. “Moreover, even though the economic environment remains uncertain, we remain comfortable with our full year outlook given our strong competitive position, which we are reinforcing with the Gildan Sustainable Growth (GSG) strategy, and POS trends across our business coming in line with our expectations during the first quarter”.
During the first quarter, Gildan generated net sales of $703 million, down $72 million or 9% year-over-year, reflecting anticipated headwinds tied to the current demand environment and to strong comparative periods in the first half of 2022.
In line with Gildan’s capital allocation priorities and its commitment to return of capital to shareholders, the company continued to be active on its share buyback program during the quarter, repurchasing 1 million shares at a cost of $32 million.
During the first quarter, year-over-year POS trends at North American distributors came in line with expectations, showing sequential quarterly improvement, but were down compared to last year. Further, while international sales in the quarter were down 17% versus the prior year, Gildan is continuing to maintain a positive outlook regarding the recovery of international markets for the full year, supported by positive POS in the quarter.
Gildan observed notable strength in the hosiery and underwear category for the quarter with sales totaling $115 million, up $8 million or 7%, over the prior year quarter, mainly driven by sock volume growth. While industry demand for men’s underwear remained down year-over-year, POS trends improved sequentially, and we were pleased with our share gains in men’s underwear in the mass retail channel. Additionally, while retail customers remain cautious on replenishment across all product categories, Gildan remains encouraged by improving inventory levels at the retailers in the first quarter reflecting what we believe is an improving demand environment for our products.
Gildan generated gross profit of $188 million in the quarter and adjusted gross profit1 of $184 million, down respectively $53 million and $55 million over the prior year, driven by the decline in sales and lower gross margins. Gross margin of 26.7% and adjusted gross margin1 of 26.2% were down year-over year by 430 basis points and 470 basis points, respecitvely.