Gildan Activewear cuts 2nd-quarter, full-year profit outlook

Apparel retailer Gildan Activewear Inc. on Tuesday cut its second-quarter and full-year earnings estimates below Wall Street's expectations due to lower-than-planned sales growth and production levels.

The company now anticipates adjusted earnings of 35 cents per share in the second quarter ended March 30, compared with a previous estimate of 42 cents per share. The new estimate represents a 13 percent increase over 2007 second-quarter results.

Analysts, on average, estimate earnings of 42 cents per share in the second quarter, according to a poll by Thomson Financial.

For the full year, Gildan forecasts adjusted earnings between $1.45 and $1.50 per share, down from prior expectations of $1.85 to $1.90 per share. Analysts, on average, anticipate full-year earnings of $1.90 per share.

Gildan said the reduction in estimates is primarily due to lower-than-expected sales growth, resulting from production shortfalls at a Dominican Republic textile factory, and a write-down of inventories of discontinued product lines.

The lower-than-anticipated production levels at its Dominican Republic factory will continue to curb sales in the second half of the year, the company said, and will also result in higher-than-projected manufacturing costs. Gildan also expects results to be hurt by increases in freight and energy costs.

The company said it is confident that in the second half of the fiscal year it will resolve the operational issues affecting its earnings growth.

Gildan will report fiscal second-quarter results on May 7.

Shares plunged $5.92, or 16.5 percent, to $30 in premarket trading. Shares have traded between $28.82 and $46.47 in the past 12 months.