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What: Investors were tossing shares of apparel manufacturer Gildan Activewear
So what: Let's look at the bright spot first. For its fiscal fourth quarter, Gildan reported $0.40 in earnings per share, which was in line with analysts' estimates. And that's pretty much where the good news ends.
Sales for the quarter were $482 million, up 31% from the prior year but below the $498 million that Wall Street was looking for. Gross margins were down to 20.4% in the quarter, below both the company's prior guidance of 22% and last year's 27.3%. Management blamed higher distributor-price promotions and higher cotton prices as reasons for the contracting margins.
Now what: If the fourth-quarter results weren't great, the projected performance was downright terrible. "The Company is providing sales and earnings guidance, based on the assumption of continuing weak overall economic conditions and weak industry demand," Gildan representatives said in a statement. "Also, the industry is managing through a unique transition from rapid inflation in cotton costs to rapid deflation."
For the upcoming quarter, analysts had been expecting $0.29 in earnings per share, but Gildan dashed that hope, saying that it will probably lose $0.40 in the quarter that includes December. Sales are seen clocking in at $300 million, also well below the Wall-Street-projected $451 million. And the full-year guidance was no more cheery, with the expectation of $1.30 in per-share profit on $1.9 billion in revenue. Analysts had estimated $2.27 in EPS on $2.15 billion in revenue.
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