Our net loss for the first quarter was $0.38 per share compared with our December forecast of approximately $0.40 per share. Net selling prices for Printwear were slightly higher than projected in December, due to lower-than-projected promotional discounting in the month of December. The loss in the first quarter compared to adjusted net earnings of $0.30 per share in the first quarter of fiscal 2011. The first quarter loss was due to the following factors: Number one, we continued to consume inventories during the first quarter, which had been previously manufactured with peak cost cotton. Our average cotton cost during the first quarter was slightly more than double our cost of cotton in the first quarter of last year. The higher cotton cost in the quarter, compared to the first quarter of fiscal 2011, negatively impacted EPS by close to $0.45 a share.

The second factor was the selling prices in Printwear were reduced during the first quarter to align with current cotton futures, initially through short-term promotions and eventually through a formal reduction in gross selling prices, which was announced in early December. Selling prices in the Branded Apparel division, which have remained largely unchanged during the course of fiscal 2011, were increased at the end of the fiscal year in order to reflect current cotton future costs.

In anticipation of the above selling price reductions in Printwear, U.S. wholesale distributors delayed replenishment of their inventories and supply demand from screenprinters by defeating inventory levels. Distributors were able to operate with lower inventories in the first quarter, as the first quarter is the lowest seasonal quarter for Printwear sales. This destocking of distributor inventories resulted in close to a 40% reduction in Gildan's unit sales in the first quarter and was significantly more impactful than the 3.9% decline in screenprinter demand compared to the first quarter of last year.

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