July 30, 2020
Gildan Activewear Reports Second Quarter 2020 Results
- Strong free cash flow1 of $177 million, with total liquidity increased to $1.2 billion
- Sales of $230 million, after reflecting a sales discount accrual of $25 million related to pricing action
- GAAP diluted loss per share of $1.26, and adjusted diluted loss per share1 of $0.99
- Q2 GAAP results reflect $224 million of charges, including $131 million of COVID-related charges and $93 million in accelerated Back to Basics initiatives
- Amendment to credit agreement covenants eliminates impact of Q2 and provides flexibility going forward
- Actions to right-size manufacturing and SG&A
- Strong focus on health and safety measures as operations ramp back
Montreal, Thursday, July 30, 2020 – Gildan Activewear Inc. (GIL: TSX and NYSE) today announced its results for the second quarter ended June 28, 2020.
Results for the second quarter, as anticipated, reflected the effects of the widespread government-mandated closures which began in the latter part of March and led to a pause in economic activity for a good part of the second quarter. Not surprisingly, our sales in the quarter of $230 million were down 71% compared to last year and we incurred substantial COVID-related costs and charges. “Despite the impact of the COVID-19 pandemic, we maintained a strong focus on our key priorities, including the health and safety of our employees and the long term positioning of our business” said Glenn J. Chamandy, President and CEO of Gildan Activewear. “Against the challenging backdrop of the pandemic and the difficult but necessary actions we have taken, we have accelerated efforts under our Back to Basics strategy to further simplify our product portfolios, remove complexity and cost from our business, better support our customers and drive long term market share growth.”
While results for the second quarter were significantly impacted by the COVID-19 pandemic, we were encouraged by certain signs of recovery, particularly as point of sales (POS) trends during the quarter performed better than we expected across all channels. By the end of the second quarter, essentially all imprintables distributor customer warehouses and the majority of retailer brick and mortar store locations had re-opened in the U.S., although many with reduced operating hours. POS related to certain categories in the US imprintables channel, including fleece and fashion basics, started to turn positive in the month of June. In international markets, although POS were down on a year-over year basis, demand declines decelerated with POS in Europe and Latin America performing better than anticipated for the quarter. In the retail channel, while sales were down meaningfully overall, certain categories held up better during the quarter and total sales of our men's underwear products were up 23.5% compared to last year, reflecting strong sell-through and market share gains. We also saw good performance in activewear in certain retailers. While the majority of our manufacturing operations remained closed for the quarter, sell-through of our products were serviced from our inventories and from our customers' inventories, particularly in the imprintables channel, where we saw a significant drawdown of inventories in the channel during the quarter. Finally, in line with improving demand, we have started to resume production at various operating levels across the majority of our facilities.
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