Gildan activewear raised its dividend nearly 10% on Wednesday as it unveiled a plan to boost sales and earnings over the next three years.
The Montreal-based CFO, Rod Harries, says Gildan is a “fundamentally stronger company” having delivered strong fourth quarter results and record sales, earnings and free cash flow in 2021. “Thanks to the considerable efforts, expertise and focus of our entire team, we navigated through a still difficult environment in 2021 to achieve the main objective of our strategy, which is a return to basics,” he said. he said Wednesday during a conference call with analysts.
Gildan said it plans to continue expanding capacity in Central America and the Caribbean and resume expansion in Bangladesh, where it is building the first of two major textile and sewing facilities. The company added that its capital expenditures expressed as a percentage of sales would climb between 6% and 8% to support its long-term growth and vertical integration.
In its outlook, Gildan said it expects compound annual sales growth of 7% to 10% over the next three years as well as earnings before tax and interest growth of 18% to 20%.
These forecasts, which will be detailed at an investor day scheduled for next month, exceed those of analysts. “We expect Gildan to outperform its industry today, given better-than-expected fourth quarter results and a favorable three-year growth outlook, as it approaches its Investor Day. March 29,” Chris Li of Desjardins Capital Markets wrote in a note.
Mr. Li said he intended to “revise” his forecast for the stock price.
Shares of Gildan advanced Wednesday $1.71, or 3.5%, to close at $50.75 on the Toronto Stock Exchange.
The company announced on Wednesday that it will now pay a quarterly dividend of 16.9 US cents per share, down from 15.4 US cents previously. It also expanded its share buyback program to repurchase 10% of outstanding shares, up from 5% previously.
Profits and revenues on the rise
Gildan posted fourth-quarter earnings of $173.9 million, or 89 cents per share, up from $67.4 million, or 34 cents per share, a year earlier. Net sales for the quarter ended Jan. 2 hit a fourth-quarter record of 784.3 million, up 14% from 690.2 million in the same period a year earlier.
Quarterly revenue growth was propelled by a 17% increase in sportswear sales and higher net selling prices, while footwear and underwear revenue climbed 3%.
On an adjusted basis, Gildan says it earned 76 cents per share, compared to 45 cents per share a year earlier. Analysts on average had expected adjusted earnings of 60 cents per share and revenue of 735.6 million, according to forecasts compiled by financial data firm Refinitiv.
For the full year, Gildan earned $607.2 million, or $3.07 per share, from sales of $2.9 billion, compared to a net loss of $225.3 million, or $1. US$14 per share, on revenue of $1.98 billion in 2020.