Dive Brief:
- Gildan Activewear Inc. net sales were $862 million in the second quarter, up 3% year over year, according to a Thursday news release.
- The company’s activewear sales were up 6% to $737 million. Gildan’s international sales increased 7% for the quarter, which it said was due to a rebound across all regions.
- Hosiery and underwear sales fell 16%, mainly due to the loss of its sock license deal with Under Armour and “the unfavourable mix and continued broader market weakness in innerwear.” Excluding Under Armour, the category would have seen single-digit growth, per the company.
Dive Insight:
Gildan’s second quarter earnings report was the first since co-founder Glenn Chamandy was reinstated as CEO and the entire board resigned in May. Chamandy was fired in December 2023, which resulted in a months-long proxy battle between the former board and activist investor group Browning West. The board is now composed of members approved by the shareholder group.
On the earnings call, Chamandy was asked if he’d gained any insights during his time away from the business as well as where the company was now.
Chamandy responded by referencing some of the efforts the company was focusing on prior to his termination, including an investment in a new facility in Bangladesh and new technology.
“Taking a step backwards, I was saying to myself…look this was a little bit crazy to be honest with you,” Chamandy said on the call. “And now that I'm back I can see that everything is intact. I think that nothing has changed. All those opportunities are still here…The team internally, the management team, the employees, all the ranks on file basically are motivated more than ever. And I think that that's the one…positive out of this whole outcome.”
Gildan’s reported earnings per share was $0.35, down 60% from the prior year. David Swartz, senior equity analyst for Morningstar Research Services, said this stat added to “the complexity of Gildan’s results.”
“The large disparity with the adjusted result was primarily due to $57 million in expenses related to the proxy fight and management changes,” Swartz wrote in an analyst note. “Including expenses that were realized in the prior quarter, the cost to shareholders of the entire episode was an astonishing $77 million.”
In its 2024 outlook, Gildan said it was still executing its Gildan Sustainable Growth strategy, initiated in 2022, which focuses on growth, innovation and ESG. It continues to expect revenue growth in fiscal 2024 to be flat or in the low-single digits.
