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» Gildan Activewear Inc. F3Q10 (Qtr End 07/04/10) Earnings Call Transcript
» Gildan Activewear Q2 2010 Earnings Call Transcript
» Gildan Activewear Inc. F1Q10 (01/03/10) Earnings Call Transcript
I’m joined here today by Glenn Chamandy, our President and Chief Executive Officer; and Laurence Sellyn, our Executive Vice President and Chief Financial and Administrative Officer.Before Laurence takes you through the results, I’d like to remind everyone that certain statements included in this conference call may constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve unknown and known risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. We refer you to the company’s filings with the U.S. Securities and Exchange Commission and Canadian securities regulatory authorities that may effect the company’s future results. I would now like to turn the call over to Laurence. Laurence Sellyn Good morning. Today we announced another strong quarter with record sales and earnings for the fourth quarter of the fiscal year. Net sales revenues were $369 million, up 22.3% from the fourth quarter of last year and diluted EPS before $0.01 restructuring charge were $0.48 per share up 37% for last year. The growth in EPS was primarily due to strong growth in sales revenues and increased gross margins, compared with last year, partially offset by increased selling, general and administrative expenses. Our growth in sales was due to overall demand recovery and higher market share in the U.S. screenprint market, as well as increased penetration in international screenprint markets. Industry shipments from U.S. wholesale distributors to U.S. screenprinters increased by 2.7% in the fourth quarter and Gildan’s market share in the U.S. wholesale distributor channel was 64%, compared with 57% in the fourth quarter of last year. Therefore, we maintained the further significant market share increases, which we have achieved during fiscal 2010, in spite of having low activewear finished goods inventories, which resulted in a continuing large back order position.
In addition, we increased our unit sales volumes in international and other screenprint markets by approximately 50% in the quarter and achieved significant sales growth in underwear and activewear in the U.S. retail channel from a small base in fiscal 2009.Unit sales volumes of socks were up by 9%, compared with the fourth quarter of last year, including the negative impact of discontinued sock programs. Sell-through of men’s and boys sock programs manufactured by Gildan from retailers to consumers was very strong in the quarter both for retailer private label and retailer license brands, as well as for Gildan branded sock programs, although certain other categories were lower than planned. Dollar sales revenues of socks increased by 1% compared to a year ago. The growth in dollar sales revenues was lower than the growth in unit volumes due to the execution of a planned shift to a more basic product mix which fits with Gildan’s large scale manufacturing, which was completed in the first half of the fiscal year and to significantly increase participation in retailer back-to-school promotions. Gross margins in the fourth quarter were 27.3%, compared to 25.7% in the fourth quarter of last year. Gross margins in the fourth quarter last year included the negative impact to the special discount applicable to distributor inventories, which reduced margins last year by 290 basis points. The increase in gross margins was due to the non-recurrence of a special discount, the $8 million proceeds from the Haiti insurance claim, which added 240 basis points to gross margins and the impact of a cotton subsidy in the company’s U.S. yarn-spinning joint venture, which increased gross margins by 170 basis points. The full amount of the cotton subsidy is reflected as a reduction of cost of goods sold and the 50% benefit attributable to our joint venture partner Frontier Spinning is reflected in non-controlling interest in the earnings statement for a net after-tax benefit to the corporation of $1.9 million or $1.5 per share. Read the rest of this transcript for free on seekingalpha.com