Gildan Activewear Inc. said Hurricane Florence and retailers shifting toward carrying their own private label hosiery and underwear hampered the company’s performance, but it still managed to post a profit.
The Montreal-based clothing manufacturer that keeps its books in U.S. dollars saw its third-quarter profit edge lower compared with a year ago as its sales grew 5.3 per cent.
The company said it earned $114.3 million or 55 cents per diluted share for the quarter, down from $116.1 million or 52 cents per share a year ago and that its sales totalled $754.4 million, up from $716.4 million in the same quarter last year.
However, the brand said about $30 million of its sales were impacted by U.S. weather that disrupted its distribution operations in the Carolinas.
“We estimate that we could have shipped another $30 million in the quarter had it not been for the disruption we faced with Hurricane Florence,” said Rhodri Harries, Gildan’s executive vice president and chief financial and administrative officer.
“We lost shipping days in our larger distribution facilities in Eden, N.C. and Charleston, S.C. as both inbound and outbound shipments were effected due to port and rail closures and the need to temporarily shut down to evacuate employees.”
He estimated that half of the sales lost because of the incident would be recuperated next quarter.
The company, he said, also continues to face struggle in its hosiery and underwear categories because mass retailers are shifting toward private labels, resulting in Gildan’s lower unit sales of products including socks.
Harries expressed optimism about the forthcoming quarter, saying Gildan has secured a private label underwear manufacturing deal for 2019 with its “largest mass retail customer,” which he did not name.
He said the deal will mean more shelf space will be allocated to the company’s men’s underwear offerings.
“We are well-positioned because the size of the program is quite large,” he said. “There are not a lot of businesses out there that can pull that off … Activewear, T-shirts, sweatshirts and underwear really is our sweet spot.”
Harries also revealed that on an adjusted basis, Gildan earned 57 cents per share for the quarter, up from 53 cents per share in the third quarter last year.
Analysts on average had expected a profit of 58 cents per share, according to Thomson Reuters Eikon.
“With three quarters now behind us, we feel good about delivering on our financial targets for 2018, despite the various headwinds we have faced this year,” said the company’s president and chief executive officer Glenn Chamandy. “We continue to feel good about our long-term growth prospects and the way our strategy is unfolding.”