Garment supplier Gildan Activewear has today declared “another strong quarter” despite inflationary pressures, softening demand and a levelling-out in profits.
It reported “record” third-quarter sales of US$850 million (£757 million) for the three months to October 2, a rise of 6% year on year.
However, lower gross margins – impacted by “inflationary cost pressures” – meant that adjusted profits remained steady at $252.2 million (£224.5 million).
The strongest part of the business remains its core activewear sales, including imprintables such as blank T-shirts, which were up 13% in the quarter to $742 million (£661 million).
The period saw an increase in capital expenditure which was primarily due to projects to increase capacity, including the construction of its new large-scale vertically-integrated textile and sewing facility in Bangladesh which is currently underway.
Gildan indicated that the outlook was mixed because of weakness in some sectors, including international markets where the North American group is seeing “ongoing softness in demand”.
It also warned that the impact of higher raw material costs would become more pronounced in the fourth quarter but added that the company remained focused on delivering on its operating profitability target range of 18% to 20%.
Glenn J Chamandy, Gildan’s president and CEO, said: “The strength of our activewear business, driven by North American imprintables sales, together with the benefits from our vertically-integrated manufacturing model, allowed us to deliver another strong quarter.
“These results are a testament to the progress we are making under the Gildan Sustainable Growth strategy, which we remain fully focused on as we continue to drive to deliver on our three-year targets.”
Combining the latest results with the previous six months, Gildan achieved an 18% increase in net sales to $2,520 million (£2,243 milion) for the nine months to October 2.
This reflected a year-on-year increase of 25% in activewear sales to $2,167 million (£1,929 million) which was primarily driven by higher net selling prices, higher unit sales volumes and “favourable product-mix”.
In its analysis, Gildan stated: “Activewear volume growth reflected the meaningful recovery in demand from Covid-19, particularly in the first half of the year, and our ability to better service demand this year due to stronger inventory levels as compared to the prior year, which were impacted by the hurricanes in Central America in 2020 and yarn labour shortages.”
Adjusted gross profit for the nine months was up 14% to $756.3 million (£674 million), again affected by lower gross margins. This was mainly due to higher raw material and other manufacturing costs but also losing the one-off cotton subsidy of $18 million (£16 million) through the United States Department of Agriculture’s Pandemic Assistance for Cotton Users programme during the previous year.