GIL : NYSE : US$36.55
Gildan is one of North America’s premier vertically integrated apparel manufacturers, focusing on frequent replenishment items with relatively low fashion risk. The company sells to the wholesale market, along with directly to retail.
RECORD RESULTS TO BEGIN F2013
We are raising our target price to US$42.00 (from US$41.00) following strong Q1/F13 earnings results.
Gildan reported Q1/F13 earnings results on Wednesday, after the market close. Revenue increased 39% YoY to $421 million, ahead of
previous guidance of $400 million. After excluding restructuring and acquisition related costs, EPS of $0.32 was ahead of consensus of $0.30 and well above Q1/F12 at -$0.38. Gildan reiterated its F2013 EPS guidance of $2.60-2.70, although we believe this has room for upward revisions as the year progresses.
During the quarter Printwear sales grew an impressive 66% YoY to $244 million, driven by higher overall unit volumes, the nonrecurrence
of both inventory destocking and the distributor devaluation discount which occurred last year. Promotional discounting in the channel was also lower than previously anticipated. Meanwhile, Branded Apparel sales improved 13% YoY due to increased sales of Gildan branded products, which offset lower YoY sock sales.
Our 12-month US$42.00 target price represents 15.7x our F2013 EPS estimate of $2.68. We believe there is a strong probability for upward
guidance revisions as the year progresses, should cotton prices remain range-bound, and should Gildan secure additional retail wins and
wholesale market share.