Canadian activewear company Gildan reported a 41 percent increase in Q2 operating income to $195.5 million versus $138.7 million for the period ended June 30. Adjusted Ebitda was 36 percent higher year-over-year at $232.3 million, but net income tumbled by 62 percent to $58.4 million from $155.3 million.
Group total Q2 net sales increased by 3 percent to $862.2 million from $840.4 million as gross margin expanded by 460 basis points to 30.4 percent from 25.8 percent in the year-ago period. Activewear sales, buoyed by positive point-of-sale trends in North America and elsewhere globally, grew by 6.5 percent to $736.6 million. Gildan says it continues to gain market share in key categories, including fleece and ring-spun products. Period sales outside of North America rose by 7 percent to $70.9 million, with the gain stronger across Continental Europe than in the UK. Q2 revenues in the U.S. improved by 2.4 percent to $763.8 million.
Gildan, with a manufacturing segment currently running at 85 percent capacity, says it has “a lot of room for optimization and continued improvement.” A Bangladesh facility is forecast to be at 75 capacity by the end of 2024, allowing the company to improve its inventory positions in key international markets.
The company is currently forecasting its FY24 revenue growth at flat to up low-single digits with a full-year adjusted operating margin slightly above its forecasted 18 to 20 percent. Meanwhile, Gildan forecasts further improvement in operating margin over the next three years as sales come in at a compound annual growth rate in the mid-single digits.
