Weak demand hits Gildan
09/06/2009
Canadian clothing manufacturer Gildan Activewear has reported net earnings of US $7.1 million for its second fiscal quarter, ending April 5, 2009, compared to US $42.1 million for the same period last year.
The company said this reduction was because of “significantly lower unit sales volumes, as a result of weak end-use demand” and significantly lower gross margins.
Net sales in the second quarter of fiscal 2009 amounted to US $244.8 million, down 16.7% from U.S. $293.8 million in the second quarter of last year, due primarily to a 21.9% decline in activewear sales including a 13.9% decrease in unit shipments of activewear.
Gildan also said its sales suffered because of an “unfavourable activewear product-mix”, caused by a lower proportion of sales of high-valued fleece and long-sleeve T-shirts, and an abnormally high proportion of sales of “second-quality product” as the company made efforts to reduce lower value inventory.
Sales in the Canadian market declined by 45.9% compared to the second quarter of last year, due to weak demand, distributor destocking and the decline in the value of the Canadian dollar. Sales in international markets were negatively impacted by the decline in the value of local currencies compared to the US dollar.
There were higher unit sales in Western Europe, the Asia-Pacific region and Mexico but these were offset by the temporary suspension of distribution in eastern Europe, which had been a growing market in 2008. Sales of socks were essentially unchanged from the second quarter of fiscal 2008 in spite of the elimination of unprofitable sock product-lines during the last fiscal year.
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