Net earnings for the three months ended March 30 rose to US$84.7M, versus US$78.7M a year earlier
Gildan Activewear (GIL.TO)(GIL) shares climbed over eight per cent in early trading on Wednesday, as investors responded to the Canadian t-shirt maker’s confidence in the face of U.S. tariffs, and rising profit in the first quarter.
The Montreal-based apparel maker, which keeps its book in U.S. dollars, saw net earnings for the three months ended March 30 rise to US$84.7 million, versus US$78.7 million a year earlier. At the same time, chief executive officer Glenn Chamandy says Gildan is “well-positioned” from a tariff perspective.
Gildan manufactures basic apparel like activewear, underwear, and socks at facilities primarily located in Central America, the Caribbean, North America, and Bangladesh. U.S. President Donald Trump’s current slate of trade levies includes a minimum baseline tariff of 10 per cent on imports from about 90 nations.
“We have significant U.S. cotton and yarn content in our products, which should allow for significant tariff savings, since a 10 per cent reciprocal baseline tariff does not apply to the value of U.S. content-imported products, which puts us in a very strong competitive advantage,” Chamandy told analysts on a post-earnings conference call after markets closed on Tuesday.
“We’re better-positioned than anybody in the market,” he added. “Not everybody can offset the tariff costs like we do, because of our vertical integration, our low-cost manufacturing, our flexibility, our agility, and everything else we have working for Gildan.”
The company’s Toronto-listed stock closed 7.12 per cent higher on Wednesday at $63.53 per share. The stock hit an all-time intraday high above $78 in early March.
Gildan maintained its previously announced guidance for 2025 on Wednesday, while acknowledging the potential for tariffs to weaken profit margins and demand. The company expects mid-single digit full-year sales growth, and free cash flow above US$450 million, versus the US$389 million it booked in 2024.
“We’re in a great position to take [market] share,” Chamandy said.
CIBC Capital Markets analyst Mark Petrie notes Gildan can adjust production levels between Bangladesh and Central America to further offset U.S. tariffs.
“Over time, we see tariffs and trade uncertainty as a tailwind for Gildan (not unlike the pandemic) as it pushes U.S. customers to favour sourcing in the Western Hemisphere,” he wrote in a research note on Tuesday.
“We estimate Gildan’s unmitigated tariff exposure at roughly a couple hundred basis points,” Petrie added. Citing uncertain demand linked to the broader economy, he lowered his price target on Toronto-listed Gildan stock to $56 per share from $60, while maintaining an “outperformer” rating.
Source: https://ca.finance.yahoo.com/