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How Did Gildan Activewear Perform in 1Q16?

Gabriel Kane

What Did the First Week of May Bring for the Consumer Sector?

(Continued from Prior Part)

Price movement

Gildan Activewear (GIL) fell by 2.9% to close at $30.16 per share at the end of the first week of May 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -2.9%, 0.53%, and 6.4%, respectively. This means that GIL is trading 1.6% below its 20-day moving average, 2.4% above its 50-day moving average, and 3.4% above its 200-day moving average.

Related ETFs and peers

The PowerShares FTSE RAFI Developed Markets ex-US Small-Mid Portfolio ETF (PDN) invests 0.13% of its holdings in Gildan. The ETF tracks a fundamentally weighted index of small- and mid-cap developed market securities outside the United States. The YTD price movement of PDN was 2.1% on May 6, 2016.

The FlexShares Morningstar Developed Markets ex-US Factor Tilt ETF (TLTD) invests 0.05% of its holdings in Gildan. The ETF tracks an index of equities from developed countries outside the United States. The index favors smaller, value-oriented companies.

The market caps of Gildan Activewear’s competitors are as follows:

  • Hanesbrands (HBI) – $10.6 billion
  • Ralph Lauren (RL) – $7.6 billion

Performance of Gildan Activewear in fiscal 1Q16

Gildan Activewear reported fiscal 1Q16 net sales of $593.3 million, a fall of 6.7% from the net sales of $636.2 million in fiscal 1Q15. Sales from its Printwear and Branded Apparel segments fell by 9.1% and 1.8%, respectively, between fiscals 1Q15 and 1Q16.

Its adjusted net income and adjusted EPS (earnings per share) rose to $69.0 million and $0.28, respectively, in fiscal 1Q16, from $57.5 million and $0.24 in fiscal 1Q15. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $111.8 million in fiscal 1Q16, a rise of 21.3% compared with fiscal 1Q15.

Acquisition

Gildan Activewear has signed a definitive agreement to acquire 100% of the equity interest of Alstyle Apparel and its subsidiaries. The purchase price for this transaction is $110 million. This is expected to be closed before the end of June 2016. This acquisition will help Gildan penetrate printwear markets in the United States, Canada, and Mexico.

Dividend

The company declared a cash dividend of $0.078 per share on its common stock. The dividend will be paid on June 13, 2016, to shareholders on record at the close of business on May 19, 2016.

Projection

The company has made the following projections for fiscal 2016:

  • consolidated net sales of more than $2.6 billion, which consist of printwear sales of more than $1.6 billion and branded apparel sales of more than $1.0 billion
  • adjusted EPS of $1.50–$1.60

This guidance does not include the planned acquisition of Alstyle. In the next part of this series, we’ll look into Snyder’s-Lance.

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