Gildan mulls strategy for American Apparel brand
Montreal firm will continue to produce some lines in U.S.
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 Gildan’s 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 USA 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 (U.S.) 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 fac- tories 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 Gildan foresees opportunities to expand sales in North America and internationally, especially in Europe where fashion-style clothing are a bigger share of the market.
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.
“We’re also going to offer product where they couldn’t compete before at price points relative to the competitive landscape.” GLENN CHAMANDY GILDAN CEO ON AA BRAND
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 9 per cent from last year, at the midpoint. Its tax rate is expected to be 5 per cent.