Montreal clothing manufacturer Gildan on Wednesday presented year-end financial performance that was better than expected for the quarter during which its CEO was fired, leading to protests from several institutional shareholders.
Adjusted earnings per share increased 15% to 75 US cents for October, November and December. Sales increased 9% to US$783 million.
Analysts’ consensus was for adjusted earnings per share of 73 US cents and revenue of 765 million US dollars.
A charge of US 6 million is recorded in the results in connection with the termination of employment of the former CEO, Glenn Chamandy, and related consulting services costs with regard to “matters affecting shareholders” .
A 10% dividend increase has also been announced.
Management maintains that Gildan enters fiscal 2024 “in a good position.” “Gildan has a bright future ahead of it,” commented the new CEO, Vince Tyra, in a press release.
However, Gildan expects sales in January, February and March to be lower than the same period a year ago due to the impact of higher than expected customer restocking in the fourth quarter of 2023. The company therefore anticipates a contraction in the adjusted operating margin for the current quarter.
The forecasts revealed for the financial year which has just begun seem largely in line with what analysts predicted. Management expects sales to be flat to up in the low single digits and for adjusted earnings per share to be in the range of $2.92 to $3.07, i.e. -say an increase of between 13.5% and 19.5%.
Gildan caused a surprise by firing Glenn Chamandy in December, two weeks before the end of the fourth quarter of the fiscal year. Glenn Chamandy had been CEO for 20 years. The board named Vince Tyra, a former Fruit of the Loom executive, to replace him.
Glenn Chamandy’s firing sparked a power struggle between the board and institutional shareholders.
Los Angeles investment firm Browning West is leading a cabal to reconstitute the board of directors and bring co-founder Glenn Chamandy back at the helm of the company.
Browning West is seeking to elect eight new board members at the May 28 annual shareholder meeting.
The board removed Glenn Chamandy from his position as CEO, citing differences over succession plans and pointing out that Chamandy wanted to move forward with a risky, multibillion-dollar acquisition strategy.
Gildan owns and operates production facilities in Central America, the Caribbean, North America and Bangladesh.