Breaking News

The Canadian Press - ONLINE EDITION

Gildan inspecting buildings in Haiti to restart production within days

By: Ross Marowits, THE CANADIAN PRESS

9/02/2010 8:30 PM | Comments: 0

MONTREAL - Gildan Activewear (TSX:GIL) engineers are inspecting two buildings in Haiti to allow a contractor whose factory collapsed during last month's earthquake to restart production and provide employment within days.

The Montreal-based clothing producer said Tuesday it was providing the contractor with financial assistance to purchase equipment and reopen its facilities.

Related Items

Articles
- Public sympathy, donations after NZ teen kidnaps injured puppy to save it from being put down

Among them is sewing contractor Palm Apparel, which lost hundreds of employees when its plant collapsed. Just over 200 Palm workers remained unaccounted for on Tuesday.

Two other contractors, whose facilities were not damaged by the quake have reopened. Production of a fourth contractor is being relocated.

"The company is committed to play a proactive role in supporting its contractors and their employees and to maintain our important strategic presence in the country as part of our global supply chain," Laurence Sellyn, Gildan's chief financial and administrative officer, said Tuesday during a conference call.

All of Gildan's 40 employees who monitor the work by the contractors were unharmed by the earthquake.

In addition to a $50,000 donation to the Red Cross, Gildan's employees have contributed $30,000.

Gildan and its workers have also provided $175,000 to a reconstruction fund that will focus on direct assistance to its own employees and those of its contractors. It is also helping Palm to provide financial support to families touched by the earthquake.

Sellyn said Gildan expects its sewing capacity in Haiti to be at around 90 per cent of its pre-quake levels by spring. The rest will be provided by its operations in the Dominican Republic.

The earthquake is expected to reduce Gildan's profits by two to three cents per share.

In the period leading up to the quake, Gildan's profits soared to US$28 million or 23 cents per share for the quarter ended Jan. 3, up from US$4.4 million or four cents per share a year ago.

Revenue in the first quarter of the company's 2010 financial year increased nearly 20 per cent to $220.4 million.

The results included a restructuring charge related to the consolidation of its U.S. distribution activities announced in December.

Excluding the $1.2-million charge and tax recovery, Gildan said it earned $29.2 million, compared with $5.3 million in the first quarter of its 2009 financial year.

The results beat expectations of analysts and internal company forecasts, which had forecast 22 cents of adjusted earnings per share.

Gildan attributed the increase to strong growth in sales volumes, favourable manufacturing, cotton and energy costs and a better product mix, partially offset by lower prices.

"We are pleased with our first-quarter results and with our current momentum. We are continuing to increase market share in our screen print business and it appears that industry demand may be stabilizing."

Gildan's wholesale market share grew to 63.1 per cent in the quarter, and increased to 64.3 per cent in January.

The company is increasing its capital expenditures this year to $145 million as it completes another giant underwear facility that will help supply its growing private label retail program.

Wal-Mart will soon sell Gildan underwear at all its North American locations. It also has new sock programs at Wal-Mart and Dollar General, along with a boys underwear contract at Target.

Other contracts under discussion suggest Gildan will have strong sales growth next fiscal year, Sellyn told analysts.

"We believe that mass retailers now recognize and accept Gildan's unique positioning and advantages as a manufacturing partner as they consolidate their supplier base and introduce new private label brands."

The company confirmed its outlook Tuesday for sales and margins for the full financial year that it provided in December.

Gildan expects sales will grow about 17 per cent to more than $1.2 billion, while gross margins will be around 26 per cent.

With the key U.S. market expected to be affected by the recession, Gildan continues to focus on international expansion.

CEO Glenn Chamandy said there is strong interest from many regions, including Japan and Australia. Sales are also increasing to China.

Sales of activewear and underwear increased 32 per cent to $152.9 million, while sales of socks fell to $67.5 from $68.2 million.

The first quarter is seasonally the slowest quarter for activewear sales.

On the Toronto Stock Exchange, Gildan's shares closed at C$23.92, up 22 cents.

Rate this
This article has not yet been rated.

We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

You can also register and/or login to the site and join the conversation by leaving a comment.

Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.