Gildan Activewear Inc (GIL) Q2 2025 Earnings Call Highlights: Record Sales and Strategic Growth ...
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Gildan Activewear Inc (NYSE:GIL) reported record second quarter sales of $919 million, up 6.5% year-over-year, driven by strong activewear sales growth of 12%.
The company achieved a record adjusted diluted EPS of $0.97, marking a 31% increase year-over-year, reflecting a focus on profitable growth.
Gildan Activewear Inc (NYSE:GIL) continues to gain market share in key growth categories, supported by strong demand for existing brands and new brand offerings.
The company's Bangladesh facility is fully ramped up, contributing to operational efficiency and cost advantages.
Gildan Activewear Inc (NYSE:GIL) has been recognized for its commitment to sustainable practices, being named one of Canada's best 50 corporate citizens and featured among Time's world's most sustainable companies.
Negative Points
International sales were down by 14% year-over-year due to moderated demand in Europe and persistent softness in Asia.
Hosiery and underwear sales decreased by 23% compared to the prior year, impacted by broad-based market demand softness and program resets.
Operating cash flow decreased to $46 million in the first half of 2025 from $113 million in the first half of 2024, primarily due to higher working capital investments.
The company faces challenges from tariffs, although it has implemented pricing actions to mitigate the impact.
There is ongoing uncertainty in the macroeconomic environment, which could affect future performance and market conditions.
Q & A Highlights
Warning! GuruFocus has detected 5 Warning Sign with ELMTY.
Q: Can you quantify the shifts in sales from Q3 to Q4 and discuss the impact on the underwear and hosiery business, including the Nike sock pause and the exit from Under Armour? A: (CFO) The second quarter was strong, with activewear sales up 12% year over year. Some sales shifted from Q3 to Q4 due to pricing actions. We expect mid-single-digit growth when combining Q2 and Q3. The underwear and hosiery segment faced headwinds like delayed store sets and market softness, but we anticipate improvement throughout the year. The shifts are not structural and should resolve over time.
Q: What changes in the industry landscape are driving momentum in the activewear business, and what opportunities do you see going forward? A: (COO) The industry is experiencing changes due to tariffs and economic conditions, leading customers to seek stable suppliers. Our vertically integrated manufacturing provides stability. We are gaining market share in key categories like ringspun and Comfort Colors. Our US cotton and yarn content offer a competitive advantage against tariffs, and we are adding capacity in Central America to capitalize on future opportunities.
Q: How much can you increase throughput in Honduras, and what is the timing and magnitude of this opportunity? A: (CEO) We are adding capacity within existing facilities, expecting a 10% increase overall. This expansion will be completed this year, allowing us to handle future demand and take advantage of tariff-related opportunities.
Q: Is the Bangladesh facility running at optimal efficiency, and how do you view its cost savings in various tariff scenarios? A: (CEO) The Bangladesh facility is fully ramped up, contributing to operating margin expansion. We are using US cotton to offset tariff impacts and have flexibility in our supply chain to mitigate tariffs. We are well-positioned to leverage our low-cost manufacturing and innovation pipeline.
Q: Can you expand on the pricing actions taken in response to tariff pressures and how competitors have responded? A: (CEO) Pricing varies by customer and product category, with sequential rollouts. The impact is not substantial due to our cost structure. Competitors face similar issues, and we have a competitive advantage with our vertically integrated manufacturing. Price increases are minimal compared to the overall value chain, and we are well-positioned to navigate these challenges.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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