Gil­dan tak­ing Amer­i­can Ap­parel beyond U.S.

The Hamilton Spectator - - BUSINESS -

MON­TREAL — The head of Gil­dan Ac­tivewear says he plans to con­tinue mak­ing some lines of Amer­i­can Ap­parel in the United States, but will also use its low-cost global pro­duc­tion net­works to ex­pand its of­fer­ings and pur­sue the brand’s in­ter­na­tional growth.

“We’re go­ing to con­tinue to sup­port our core Made in U.S.A. busi­ness, but we’re also go­ing to of­fer prod­uct where they couldn’t com­pete be­fore at price points rel­a­tive to the com­pet­i­tive land­scape,” CEO Glenn Chamandy said Thurs­day dur­ing a con­fer­ence call about its fourth-quar­ter and 2016 re­sults.

The Mon­treal-based maker of ap­parel, in­clud­ing T-shirts, socks and un­der­wear, re­cently bought the bank­rupt Cal­i­for­nia-based cloth­ing com­pany for $88 mil­lion in a deal that ex­cludes Amer­i­can Ap­parel stores and its e-com­merce site.

Founded by Que­bec na­tive Dov Char­ney in 1989, Amer­i­can Ap­parel rose to promi­nence af­ter open­ing man­u­fac­tur­ing fa­cil­i­ties in Los An­ge­les and at­tract­ing a young clien­tele with the adop­tion of sex­u­ally provoca­tive ad­ver­tis­ing. It twice en­tered bank­ruptcy pro­tec­tion over the past two years, cul­mi­nat­ing in its auc­tion to Gil­dan.

Gil­dan said it’s still de­vel­op­ing Amer­i­can Ap­parel’s con­sumer strat­egy but plans to use so­cial me­dia to drive the brand’s im­age.

Man­u­fac­tur­ing in the U.S. will be con­tracted out to undis­closed pro­duc­ers and dis­trib­uted through Gil­dan’s ex­ten­sive net­work. The com­pany said it hasn’t de­cided which fac­to­ries in the Caribbean or Cen­tral Amer­ica will make the clothes.

It an­tic­i­pates sales of Gil­dan’s high­est price line of prod­ucts will be $50 mil­lion to $75 mil­lion this year or around $100 mil­lion for a full year. But the com­pany fore­sees op­por­tu­ni­ties to ex­pand sales in North Amer­ica and in­ter­na­tion­ally, es­pe­cially in Europe, where fash­ion-style cloth­ing are a big­ger share of the mar­ket.

“We have huge in­ter­est from all of our in­ter­na­tional cus­tomers to carry this brand,” Chamandy told an­a­lysts.

An­a­lyst Brit­tany Weiss­man of Ed­ward Jones said that while Amer­i­can-made prod­ucts may have been im­por­tant at re­tail stores, it is not a big fac­tor on the print­wear side — which is sold to cus­tomers in­clud­ing col­lege cam­puses.

“I think that prod­uct will play very well into a fash­ion ba­sic (seg­ment), es­pe­cially in the Euro­pean mar­ket and some of those other in­ter­na­tional print­wear mar­kets where they do have a smaller share,” she said in an in­ter­view.

Gil­dan raised its quar­terly div­i­dend 20 per cent for a fifth con­sec­u­tive year af­ter post­ing strong re­sults for the quar­ter and fis­cal year. The com­pany will pay 9.35 cents per share payable April 3.

Gil­dan, which re­ports in U.S. cur­rency, earned $74.3 mil­lion in the fourth quar­ter, up from $67.6 mil­lion in the same pe­riod last year.

The profit amounted to 32 cents per share. Ad­justed earn­ings were also 32 cents per share, up from 28 cents per share in both cases.

Rev­enue for the three months ended Jan. 1 was $587.9 mil­lion, an in­crease from $543.8 mil­lion a year ear­lier.

For the full year, it earned $346.6 mil­lion or $1.47 per share on $2.58 bil­lion of rev­enues.

Gil­dan also is­sued es­ti­mates for the 2017 fi­nan­cial year, in­clud­ing ad­justed earn­ings in the range of $1.60 and $1.70 per share — up nine per cent from last year, at the mid­point. Its tax rate is ex­pected to be five per cent.

The com­pany said its branded socks and un­der­wear gained mar­ket share in the United States de­spite a slug­gish re­tail en­vi­ron­ment.

CANA­DIAN PRESS FILE PHOTO

Gil­dan Ac­tivewear CEO Glenn Chamandy says in­ter­na­tional cus­tomers are in­ter­ested in car­ry­ing its re­cently ac­quired Amer­i­can Ap­parel brand.

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