Gildan plan expansion of its textile production capacity to achieve international growth

Gildan Activewear, a Montreal-based manufacturer and marketer of branded clothing as it is working at achieving international growth plans not only to further expanding its Central American textile production capacity but also looking for more acquisitions.

The company announced its plan to build a new plant at its complex in Honduras that will churn out products in 2016, a year before the opening of a planned facility in Costa Rica.

The two plants will contain modern equipment that will increase textile capacity by about 40 per cent and generate nearly US$1B in extra revenues.

Gildan has been building its textile and yarn spinning operations as the T-shirt, sock and underwear manufacturer builds its portfolio, especially of branded products.

Gildan is the industry’s third-largest maker of men’s underwear — after Fruit of the Loom and Hanesbrands — with a 6.5 per cent market share, according to the NPD Group.

It is currently doubling underwear capacity and expects to further increase its market share with planned growth in 2015.

Chief executive Glenn Chamandy said that the company has quickly built its retail brand whereas it took a decade to generate a 10 percent market share in the wholesale screenprint T-shirt channel.

Their ability and success so far in the share they have gained in such a short amount of time just gives an idea of the huge momentum they have, their capabilities, cost structure, quality message, so are very excited about the growth in underwear as they forward in 2015.

Gildan, which reports in U.S. dollars, said that it earned $116M or 94 cents per diluted share for the quarter ended July 6, compared with $115.8M, or 94 cents per diluted share a year earlier.

Excluding restructuring and acquisition-related costs, adjusted net earnings were $116.6M. That’s 95 cents per diluted share, meeting analysts’ expectations.

Net sales for the quarter increased were $693.8M, up 12.9 per cent from $614.3M in the third quarter of 2013.

While the rapid pace of change is resulting in some short-term stress in their manufacturing operations to support growth, they are confident in achieving the significant cost savings which have been projected, added Laurence Sellyn, chief financial and administrative officer.

During the quarter, the printwear segment earned $129.7M on $483.4 million of revenues. Branded Apparel earned $15.6M as sales grew 16 per cent to $210.4M.

The company anticipates posting all-time record quarterly results in the fourth quarter with sales expected to increase nearly 12 per cent to $700M and adjusted EPS rising about 28 to 31 per cent to $1.06 to $1.09 per share.

For the full year, sales are projected to exceed $2.4B with Branded Apparel growing about 19 percent to $850M. Adjusted EPS is projected to range between $3 and $3.03, slightly lower than its prior guidance because of charges related to its acquisition of pantyhose maker Doris Inc.

Gildan Activewear Inc is a marketer and vertically-integrated global manufacturer of basic, non-fashion apparel products for customers.