MONTREAL — Strong sales abroad helped propel a leap in Gildan Activewear Inc.’s fourth-quarter profit last year as the company looked to e-commerce for bigger gains in 2019.
China has now outstripped Canada as the Montreal-based clothing manufacturer’s third-largest market, after the U.S. and Europe, chief executive Glenn Chamandy said.
“Our fastest growing market is China,” Chamandy told a conference call with investors Thursday. “We’re continuing to see really good…international growth.”
About 86 per cent of the company’s US$743 million in sales last quarter stemmed from the U.S., driving a 14 per cent overall revenue bump.
The rise included a 19 per cent jump in international sales to US$66.1 million compared with US$55.4 million a year ago.
Broken down by product, activewear sales totalled US$569.3 million, up from US$465.4 million. Hosiery and underwear sales took a hit, however, and fell eight per cent to US$173.4 million in the fourth quarter as Gildan-brand sock sales dropped and mass retailers opted not to replenish Gildan-brand drawers, the company said.
“Our Gildan-brand underwear is doing very, very well in e-commerce today,” Chamandy qualified, highlighting the potential of online sales. “Our American Apparel continues to grow. We’re leveraging all of our brands today as we go forward in e-commerce.”
Gildan, which nabbed American Apparel’s intellectual property rights and some manufacturing equipment in 2017, projects “strong double-digit” growth in online sales, said chief financial officer Rhodri Harries.
Last spring, Gildan expanded American Apparel’s presence with a new online store, providing a runway for the brand to sell its wares — from hoodies to high-waist jeans — to more than 200 countries. The brand returned to the Canadian market with an online store in November.
“Obviously, it’s still on a relatively small base,” Chamandy added of e-commerce sales as a whole. “We’re just in the beginning stages, really.”
The company, which keeps its books in U.S. dollars, is aiming for mid-single-digit sales growth in 2019, with adjusted diluted earnings per share of between $1.85 and $1.87.
“A large private-label men’s underwear program was secured with a major U.S. retailer — our inference is that it is Walmart — in 3Q, and is expected to positively impact 2019 results,” said analyst Keith Howlett of Desjardins Securities in a research note this week.
In reporting its results Thursday, Gildan raised its quarterly dividend to 13.4 cents per share from 11.2 cents.
The clothing maker earned a profit of $59.6 million or 29 cents per diluted share in the quarter ended Dec. 31, up from a profit of $54.9 million or 25 cents per diluted share during the same period in 2017.
On an adjusted basis, Gildan says it earned 43 cents per share last quarter, up from 31 cents per share a year earlier.
The result matched the average analyst estimate, according to Thomson Reuters Eikon.
Gildan reported a profit of $350.8 million or $1.66 per share on $2.91 billion in sales in 2018 compared with a profit of $362.3 million or $1.61 per share on $2.75 billion in sales in 2017.
On an adjusted basis, Gildan says it earned $1.86 per share last year, up from an adjusted profit of $1.72 per share in 2017.