Gildan Activewear Global Sales
76% of Production Facilities Are in Caribbean & Central America
Canada's shirt, underwear and sock-making giant is uniquely positioned to grow multinational sales particularly in fast-growing emerging markets.
Headquartered in Montreal, Gildan is a world-leading maker of high-quality activewear including T-shirts, collar shirts, underwear and socks for sale via wholesale and retail channels.
The Canadian-owned company focuses on the high-volume production of basic non-fashion clothing, which demands frequent replenishment.
While Gildan has built a strong market-leading position in the activewear industry in the United States, management continues to engineer production capacity in countries with low labour costs. This will enable Gildan to leverage its competitive advantages in North America and offer lower-cost products in overseas markets.
Gildan’s Largest Customer Wal-Mart
Retail giant Wal-Mart is Gildan’s largest customer, generating about 22% of Gildan’s total sales which hit US$540 million for the six-month period ending March 2008. Wal-Mart’s retail sales continue to flourish despite the U.S. economic slowdown and higher gas prices, with customers buying more of Gildan’s products on each visit even if they make fewer driving trips to the mass-market retailer.
Gildan International Sales
Customers in the United States and Canada accounted for 95% of Gildan’s sales during the first two quarters of 2008.
- United States … US$495.1 million (91% of Gildan’s overall revenues)
- Canada … $22.6 million (4.1%)
- Europe and other … $26.5 (4.9%)
Dominant Player in U.S. Activewear Wholesale Channel
In the quarter ending March 31, Gildan owned a 50.1% market share of all activewear products shipped from U.S. wholesale distributors. That percentage is up about 4% from the same quarter in 2007. Gildan’s senior management intends to increase its market share in the U.S. wholesale channel to 60%.
Gildan International Production
Gildan’s strategically located production facilities offer significant opportunities for expansion into international markets. Below is a summary of company property, plant and equipment by geographic area.
- Caribbean Basin and Central America … US$321.3 million (76% of Gildan’s facilities)
- United States … $81.3 million (19%)
- Canada and other … $21.3 million (5%)
Gildan’s Earnings Warning
On April 29, 2008, Gildan management lowered earnings guidance for full year 2008 by 30%. The decrease in projected earnings was due to production issues at Gildan’s Dominican Republic facilities. Constraints on production from the Dominican Republic plants will limit available product and therefore slow company sales in the second half of 2008.
Gildan’s International Action Plan
Gildan expects to fully resolve Dominican Republic production issues by the end of this September. The company’s existing manufacturing plants will be able to produce 50 million dozens of activewear and underwear from October 1 to September 30, 2009.
But even that ramped-up production capacity will not meet projected demand for the following year. So management has announced that Gildan will build a third large-scale textile facility in Honduras. This $100-million plant leverages the company’s existing infrastructure and manufacturing management resources.
As well, Gildan will build a new distribution center in Honduras. Increased production capacity when coupled with the new distribution center in Honduras will:
- Support Gildan’s continuing sales growth
- Enable direct shipments to both American and international customers
- Provide a lower-cost structure to handle labour-intensive activities for mass-market retail and wholesale customers around the world.
