Gildan Activewear Inc. posted record results for the second quarter, beating its own estimates thanks to significantly lower cotton costs and lower-than-forecast promotional discounting among other factors.
The Montreal-based casual wear supplier says it booked net profit of $72.3-million (U.S.) or 59 cents per share in the quarter, compared with $26.9-million or 22 cents per share in the year-earlier period.
Excluding one-time items, profit was $72.7-million or 59 cents, versus $27.8-million or 23 cents.
The maker of t-shirts, sweatshirts, underwear and socks had forecast net earnings in the 54-to-57-cent range.
The analysts' consensus estimate was 57 cents.
Net sales in the second quarter reached $523-million, up 8.4 per cent from $482.6-million in the year-earlier period and in line with the consensus estimate.
Gildan had projected sales of about $520-million.
The company recently disclosed it has operations in Savar -- the suburb of Bangladesh's capital Dhaka, where a multi-storied building housing readymade garment factories collapsed last week, killing more than 400 people – but says it bought its own factory and upgraded it to make it a safe working place.
Consolidated gross margins in the second quarter were 28.9 per cent, up from 17.8 per cent in the second quarter of 2012.
The company on Thursday also revised upwards its previous guidance for the rest of the year, saying it expects net sales revenues for fiscal 2013 of $2.15-billion, up from a forecast in February of about $2.1-billion.
It now expects full-year adjusted earnings per share of between $2.65 and $2.70, at the upper end of its previous guidance of $2.60-to-$2.70.
Gildan says the more favourable second-quarter results and anticipation of enhanced supply-chain and manufacturing efficiencies for the rest of the year should offset the negative impact of higher than previously expected cotton costs in the fourth quarter.
Desjardins Securities analyst Chase Bethel said in a research note Thursday that sales growth in the first quarter was driven by last year's acquisition of apparel maker Anvil Holdings Ltd. as well as an excellent performance in penetrating international markets on the printwear side of the business.
"We continue to believe that Gildan's strong financial position accords the company the flexibility to aggressively pursue growth opportunities while also withstanding macroeconomic headwinds," he said.