- Prachi Singh
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Gildan Activewear Inc. has said in a statement that it expects to take a
charge of approximately 19 to 23 million dollars in the first quarter,
related to the impairment of a trade receivable from Heritage Sportswear,
one of the company’s US distributor within the imprintables channel. Gildan
has therefore updated its first quarter adjusted diluted EPS guidance.
After accounting for the projected charge of 9 to 11 cents per share, the
company anticipates adjusted diluted EPS to be in the range of 14 cents to
16 cents compared to its previous guidance of adjusted diluted EPS in the
range of 24 cents to 26 cents.
The company added that after unsuccessful ongoing efforts to sell the
Heritage business, the receiver appointed to administer the Heritage
business filed a motion in court for approval of the orderly wind down of
Heritage’s operations and sale of its assets by liquidation. And the above
mentioned charge is the result of this filing.
As Heritage is a wholesale distributor selling blank apparel to
screenprinters and decorators, who in turn resell the decorated garments to
end users, the company expects the Gildan business formerly carried out by
Heritage (representing Gildan net sales of approximately 60 million dollars
in 2018) will be mostly absorbed by other wholesale distributors within the
channel. Consequently, the company does not expect any adverse impact on
its initial full year sales projection for 2019 due to the wind down of
operations of Heritage.
Reaffirming its 2019 full year guidance, the company has projected sales
growth in the mid-single digit range and is updating its full year GAAP and
adjusted diluted EPS guidance to reflect the anticipated charge related to
Heritage. The company is now projecting GAAP diluted EPS to be in the range
of 1.80 dollar to 1.90 dollar compared to its previous guidance of GAAP
diluted EPS of 1.90 dollar to 2 dollar and adjusted diluted EPS in the
range of 1.90 dollar to 2 dollar compared to its previous guidance of
adjusted diluted EPS of 2 dollar to 2.10 dollar.
