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Gildan, Delta Apparel Report Strong Sales Gains

The Top 40 promo suppliers overcame supply chain challenges to post earnings increases, too.

Despite ongoing supply chain challenges, Gildan (asi/56842) and Delta Apparel (asi/49172), two of the largest suppliers in the North American promotional products industry, reported strong year-over-year gains in sales and earnings for the quarter that ended June 30.

Gildan’s second-quarter total global sales tallied $747.2 million. That was down nearly 7% from 2019’s Q2 – the last second quarter that happened before the COVID-19 pandemic – but up more than 225% over the same three-month period in 2020, which was plagued by societal shutdowns that devastated business.

Gildan, one of the largest basic apparel makers in the world and the promotional products industry’s sixth largest supplier, sells across a variety of channels, including retail and imprintables, the latter including sales to promo. Imprintables business was integral to helping accelerate Gildan’s activewear sales 353.7% year over year in Q2, the company said.

Meanwhile, Gildan posted an overall adjusted gross profit of $228.1 million. After taxes and other expenditures, adjusted net profit was $135.3 million, or $0.68 per share, compared to the prior year’s second quarter adjusted net loss of $196.6 million, or -$0.99 per share.

Like many other suppliers, Gildan faced challenges on inventory replenishment, labor and more. It’s working through the issues.

“We continue to monitor U.S. labor shortages, which have been affecting yarn production and our ability to rebuild higher inventory levels,” the company noted. “We are also seeing tightness in raw material inputs and transportation-related factors globally, which are creating inflationary pressure. Consequently, we remain cautiously optimistic as the recovery progresses.”

Elsewhere, Delta Apparel reported that it generated its strongest quarterly earnings on record in its fiscal Q3, which corresponds to the same time period as the calendar year second quarter. Net earnings were $8.2 million, or $1.14 per diluted share, compared to a net loss of $17.8 million, or -$2.58 per share, in the June 2020 quarter. Net earnings rose 60% compared to the same quarter in 2019.

While earnings rose, sales in fiscal Q3 2021 were in Delta Apparel’s words “relatively flat” compared to the same period in pre-pandemic 2019. Even so, total net sales, which includes revenue generated from promo, retail and other channels, increased 65.3% over fiscal Q3 2020 to $118.7 million in the same quarter in 2021. Gross profit was $30.2 million compared to $3 million in the prior year third quarter.

Delta Apparel reported that inventory constraints and labor challenges hampered topline growth, but CEO Robert Humphreys said the future looks bright.

“We are thrilled with our performance during the quarter as it highlights the benefits of our broad channels of distribution, the demand in the market for the unique products and services we offer, and the efficiencies we can achieve with our vertically integrated operations,” Humphreys said.

With estimated 2020 North American promotional product revenue of $40.8 million, Delta Apparel ranked 35th on Counselor’s most recent list of the largest suppliers in the industry. Gildan is a top 10 supplier, coming in at sixth, based on estimated 2020 North American promo revenue of $413.1 million.