Gildan Activewear has published its results for the first quarter of 2021.
Overall, the apparel company generated $589.6m in sales for the first quarter ending 4 April 2021, which is up 28.4% compared to the first quarter of 2020, and down approximately 5% from the first quarter of 2019. This consisted of activewear sales of $484.6m (up 30.1%), and sales of $105.0m in the hosiery and underwear category (up 21.4%).
The increase in activewear sales was driven by double digit unit sales volume growth in North American and international imprintables markets and activewear sold in retail channels, as well as favourable product-mix, partly offset by lower net selling prices, explained Gildan.
“Our reported gross margin in the first quarter was 32.0% compared to gross margin of 23.2% in the first quarter of 2020. Adjusted gross margin totalled 31.1% in the quarter, up 650 bps from adjusted gross margin of 24.6% in the first quarter last year.
“Margin performance in the quarter was enhanced by the positive impact of an approximate $18 million (300 bps) accrual of a one-time payment from the USDA related to its Pandemic Assistance for Cotton Users (PACU) programme.
“The significant year-over-year increase was mainly due to the non-recurrence of Covid-related charges incurred in the first quarter of 2020, the impact of the PACU benefit, lower raw material costs, favourable product mix, and the benefit of ‘Back to Basics’ initiatives. The positive impact of these factors more than offset the impact of lower imprintables net selling prices. Excluding the impact of the one-time PACU benefit (300 bps), adjusted gross margin in the quarter totalled 28.1%.”
Gildan Activewear’s board of directors has also approved the reinstatement of the company’s quarterly dividend of $0.154 per share, in line with its previous cash dividend rate prior to suspending these payments after the first quarter of 2020.
The board’s action to reinstate dividend payments reflects increased confidence from the strong recovery so far, the company’s solid foundation for future cash flow generation, and the improvement in the company’s reported net debt leverage ratio, added Gildan.
“The board will assess further capital returns to shareholders through the potential reinstatement of our share repurchase program when we gain further visibility on the Covid-19 recovery outlook and when the company’s debt leverage ratio falls well within its historical target range.”
“Our first quarter results reflected a strong start to 2021 as continued benefits from our ‘Back to Basics’ strategy supported sell-through across all channels and drove strong operating margin performance, allowing us to deliver net earnings significantly above prior year and first quarter 2019 levels,” commented Glenn J. Chamandy, president and CEO of Gildan.
“While large events have not yet restarted, we continue to be encouraged by the strength of our imprintables business, and on the retail side we were pleased with strong double-digit growth in underwear and activewear sales compared to the first quarters of 2020 and 2019.”