Selling prices in Printwear were reduced in the first fiscal quarter to align with current cotton futures and were close to the same level in the second quarter last year. The higher cost of cotton resulted in significantly reduced margins and operating income for the Printwear division, which has historically been highly profitable and a significant cash flow generator for Gildan.
The reduction in printwear industry selling prices in the first fiscal quarter has helped to stimulate a recovery in industry demand in the second quarter. CREST data for the second quarter showed 4.9% growth in demand in the distributor channel compared to the second quarter of last year.
Also, after being capacity constrained throughout most of fiscal 2011, we have regained our market share momentum and strongly reinforced our leadership position in the printwear market. This strong trend in demand for Gildan brand in the channel has continued into the month of April.
Also, as a result of the price reduction and resulting improved visibility to plan their business, our U.S. wholesale distributors have confidence to rebuild inventories during the second quarter. Distributors restocked inventories during the quarter to normal seasonal levels.We are also increasing our penetration in all of our international screenprint markets, where unit sales volumes in the second quarter were up strongly compared to the second quarter of last year. Shipments to national accounts were flat during the second quarter compared to the second quarter of last year. We did not achieve our forecasted growth in national accounts due to weak market conditions, in which our national account customers, and the retailers which they service, were delaying replenishment of inventories. Read the rest of this transcript for free on seekingalpha.com