Gildan increasing its manufacturing footprint in Bangladesh [UPDATED]

Gildan Activewear Inc. is expanding its global manufacturing footprint by building a large complex in Bangladesh to complement its existing operations in the country, Central America and the Caribbean.

The underwear, T-shirt and sock maker said it purchased a large land parcel last month for US$45 million to build a vertically integrated manufacturing plant that would expand its textile and sewing operations.

The large multi-plant complex would be large enough to support more than US$500 million in annual sales after opening at the end of 2021. It expects to spend about US$175 million on capital expenditures this year, up from its previous guidance of US$125 million.

“The company believes the build-out of a large-scale manufacturing hub in Southeast Asia will significantly enhance its positioning to service international markets and support other key sales growth drivers,” it said in a news release.

The announcement came as Montreal-based Gildan reported that its net income for the three months ended March 31 decreased to US$22.7 million or 11 cents per diluted share, from US$67.9 million or 31 cents per share a year earlier.

The company, which reports in U.S. dollars, says adjusted profits in the first quarter were $32.8 million or 16 cents per share, compared with $74.6 million or 34 cents per share in the first quarter of 2018.

Revenues fell 3.6% to $623.9 million from $647.3 million as T-shirt and fleece sales fell 4.1% and hosiery and underwear sales were 1.8% lower.

Gildan was expected to post 15 cents per share in adjusted profits on $599.5 million in sales, according to analysts polled by Thomson Reuters Eikon.

It attributed the decreases to lower levels of distributor restocking, higher raw material and other input cost pressures. It also recorded a $24.4-million impairment charge mainly related to Heritage Sportswear, which is winding down under receivership, and about $2.5 million related to the bankruptcy of Payless ShoeSource.

Despite the quarterly declines, Gildan reaffirmed its sales and adjusted earnings per share guidance for the year.

It expects adjusted earnings of between $1.90 and $2 per share on a sales increase of around five per cent.