* Q4 EPS $0.47 vs $0.35 last year
* Sees 2011 sales of $1.6 bln vs 2010's $1.31 bln
* Sees Q1 2011 margin of 25 pct, down from 29.8 pct
* Sets quarterly dividend of 7.5 cents
(Updates with details, shares, analyst comment. In U.S.
dollars unless noted)
By Solarina Ho
TORONTO, Dec 2 Clothing maker Gildan Activewear
Inc (GIL.TO) (GIL.N) posted a 34 percent rise in quarterly
profit on Thursday, but its 2011 financial forecast fell short
of expectations, sending its shares 7 percent lower.
Gildan forecast sales of more than $300 million in the
first quarter of fiscal 2011, which began Oct. 4. That is 40
percent higher than the year-earlier period, but it said gross
margins would be about 25 percent, down from 29.8 percent in
the first quarter of 2010.
"The projected reduction in gross margins compared to last
year is due to the impact of significantly higher cotton costs,
and manufacturing start-up inefficiencies," Laurence Sellyn,
Gildan's chief financial and administrative officer, said on a
conference call with analysts.
"These unfavorable variances will only be partially offset
by the benefit of the recent price increases, which have not
been applied to back orders."
The Montreal-based manufacturer of basic apparel such as
T-shirts, socks and underwear, projected its earnings per share
would rise 20 cents in fiscal 2011. This would result in an EPS
estimate of about $1.87 a share. The full year forecast
according to Thomson Reuters I/B/E/S was C$2.00.
"If you look at where consensus was, the new guidance came
in below that consensus EPS, so that's a little bit
disappointing. That said, there's still topline growth in the
name and the valuation is reasonable," said Canaccord Genuity
analyst, Candice Williams.
"As long as demand remains strong and supplies remain tight
it seems like these are favorable conditions for Gildan."
The company expects net sales in 2011 will rise to about
$1.6 billion from $1.31 billion in 2010.
It also introduced a quarterly dividend: 7.5 cents a share,
payable on March 18 to shareholders of record on Feb. 23.
For its fourth quarter, ended Oct. 3, the company reported
net earnings of $56.8 million, or 47 cents a share, up from
$42.4 million, or 35 cents a share, a year earlier.
Before a restructuring charge of 1 cent a share related to
the consolidation of U.S. distribution activities, adjusted net
earnings were $58.3 million, or 48 cents a share.
Sales rose 22 percent to $368 million.
Analysts had expected earnings of 46 cents a share on
revenue of $370.1 million, according to Thomson Reuters
Gildan shares were down 7.03 percent at C$29.22 on the
Toronto Stock Exchange and off 5.57 percent at $29.16 in New
York Thursday afternoon.
(Additional reporting by Aftab Ahmed in Bangalore; editing by