Canadian activewear company Gildan, already seeing signs of recovery in some markets outside of North America, intends to adopt a local approach with product, pricing and supply chain initiatives to regain and increase market share in targeted international markets. With inventory levels described as “a little light” in Europe, Gildan intends to utilize its new Bangladesh sourcing operation to fill in product gaps.
In Q1, the group generated 1 percent sales growth outside North America to $52.5 million from $52.1 million, with a potential stabilization of point-of-sales trends and “noticeable signs of recovery” in some unspecified regions.
Gildan’s Q1 revenues fell by 1 percent to $696 million but were on par with prior guidance with shipments slightly ahead of expectations. Activewear sales rose by 1 percent to $592 million, driven by higher shipments across geographies and seasonal replenishment, offset by lower net selling prices and an unfavorable product mix.
Operating income declined by 18 percent to $105.1 million from $128.0 million, while net income tumbled 19 percent to $78.7 million. Gross margin improved by 360 basis points to 30.3 percent. Year-over-year inventories were up 4 percent to $1.14 billion, while free cash flow contracted by 65 percent to $71.3 million from $202.2 million, and net debt increased by 15 percent.
With the Q1 results, Gildan reconfirmed its FY24 full-year guidance. The outlook calls for flat to up low-single-digit sales growth, an adjusted operating margin slightly above an 18 to 20 percent target range, and free cash flow above 2023 levels.
