Dive Brief:
- Gildan Activewear Inc. reported third quarter revenue of $891 million, a 2.4% increase year over year, according to a press release Thursday.
- The results mark a Q3 revenue record for the company. Sales in its activewear division, which represents 88% of its business, grew 6% to $788 million.
- However, Gildan’s hosiery and underwear business dropped 18% to $103 million. The company attributed the decline to phasing out its business with Under Armour and an “unfavourable mix and continued broader market weakness in underwear.”
Dive Insight:
The company said that without the divestment of Under Armour, underwear and hosiery sales would have been up low double digits. Gildan’s underwear sales fell last quarter as well, due to the Under Armour phase-out. However, David Swartz of Morningstar Research Services said Gildan doesn’t have a competitive edge in this segment.
In the report, Gildan said it was gaining market share in activewear and basics. Gildan is capitalizing on its innovation and capacity expansion to undercut its competitors on price in printwear, according to Swartz.
“Indeed, one competitor, Delta Apparel, recently went bankrupt and another, Fruit of the Loom, is reportedly pulling away from the category,” Swartz said. “In addition, two of the three large distributors in the industry recently merged. Ultimately, we think industry consolidation benefits Gildan as it has made production and supply chain investments that others have not.”
In the release, Gildan President and CEO Glenn Chamandy said the results reflect the success of the company’s sustainable growth strategy.
“Through the continued successful execution of our three strategic pillars — capacity expansion, innovation and ESG — we are not only further strengthening our competitive position but also driving top line growth and enhancing profitability,” Chamandy said.
The beginning of 2024 was tumultuous for Gildan. In December 2023, the board fired Chamandy, resulting in a months-long proxy battle with activist investor Browning West. Chamandy was ultimately reinstated after the entire board stepped down. The current board is backed by Browning West.
“Despite the acrimonious proxy fight that resulted in Glenn Chamandy’s reinstatement as CEO, the firm continues to execute well on the Gildan Sustainable Growth plan and capitalize on its cost advantage,” Swartz said.
Gildan updated its guidance for fiscal 2024. It now expects its full-year revenue to be up low single digits, a slight increase from previous guidance of flat to low single digits.
