Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gildan Activewear Inc (GIL, Financial) reported record third-quarter sales of $891 million, up 2.4% from the previous year.
- The company achieved a record third-quarter adjusted diluted EPS of $0.85, marking a 15% increase year-over-year.
- International sales increased by 20%, driven by positive performance in Europe and inventory replenishment by distributors.
- Gildan Activewear Inc (GIL) returned a record $404 million to shareholders in Q3, demonstrating strong capital return commitment.
- The company is leveraging its Gildan Sustainable Growth Strategy (GSG) with successful execution in capacity expansion, innovation, and ESG initiatives.
Negative Points
- Hosiery and underwear sales were down 18% year-over-year, primarily due to the phaseout of the Under Armour business.
- The company faced unfavorable product mix impacts, particularly with lower fleece sales compared to the previous year.
- The adjusted effective income tax rate increased to 18.7% from 5.1% last year, impacting net income.
- The macroeconomic environment remains mixed, with ongoing market weakness in certain categories like underwear.
- Potential impacts from tariffs and geopolitical instability, such as in Bangladesh, could pose future challenges.
Q & A Highlights
Q: Can you discuss the POS trends observed during the quarter and any insights for the fourth quarter? Also, what are your expectations for 2025 market growth and market share opportunities?
A: Chuck Ward, President of Sales, Marketing and Distribution, noted that the market was down low-to-mid single digits, but Gildan gained share across categories. The company saw positive POS for the second consecutive quarter, driven by innovation and soft cotton technology. The trend of slower POS at the start of the quarter picking up later continued into Q4. Glenn Chamandy, CEO, added that for 2025, they expect flat-to-low single digit market growth but are confident in achieving mid-single-digit growth due to new programs and market share gains.
Q: How are the dynamics in National accounts playing out, and how do you expect them to evolve into 2025?
A: Chuck Ward stated that National account business is performing well, with gains across categories and channels. The company continues to gain share despite the market being down. Glenn Chamandy highlighted that growth is driven by both market share gains and new programs, which are expected to continue into 2025.
Q: How do the US yarn operations fit into the GSG plan and market share momentum?
A: Glenn Chamandy explained that the US yarn operations provide a competitive advantage through soft cotton technology and increased capacity. The modernization and capacity expansion support the company's growth in fleece and basics, enhancing printing capabilities and overall product quality.
Q: What impact do you foresee from the consolidation of two large customers, and how might it affect Gildan?
A: Glenn Chamandy believes Gildan will benefit from industry consolidation, as it has historically. While the consolidation of distributors and brands continues, Gildan's competitive advantage and large customer base position it well to capitalize on these changes.
Q: Can you provide more detail on the POS trends within ring spun fashion, basics, and fleece?
A: Chuck Ward reported positive POS in basics, driven by soft cotton technology. Ring spun and fleece categories continue to grow, with ring spun up high-single digits. Fleece sales were softer initially due to weather but are expected to perform well in the future.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
