MONTREAL — April 15, 2024 — Gildan Activewear Inc. has announced that its President and CEO, Vince Tyra, has unveiled his key focus strategic priorities. Concurrently, the company also reconfirmed its 2024 full year guidance and announced preliminary Q1 revenue. Furthermore, the company intends to hold an Investor Day in the Fall of 2024 to provide a comprehensive strategic plan.
Reflecting on his first 90 days, Tyra said: “I’m excited to be leading Gildan at this pivotal time. Having completed 90 days at the helm of Gildan, I wanted to share with you my key focus strategic priorities and articulate how we can leverage our strengths and accelerate value creation for all stakeholders. Importantly, these priorities reflect feedback received from shareholders and their desire for us to continue sustainably growing Gildan. As we continue to execute on the key components of the Gildan Sustainable Growth strategy, my first few months as CEO have confirmed my belief that Gildan’s core fundamentals are strong and that we are in a great position to unlock further potential and launch the next phase of our growth. My management team and I will continue to review the business and we look forward to presenting a fuller view at an Investor Day this Fall.”
With its three key pillars, Growth, Innovation, and ESG, the Gildan Sustainable Growth (GSG) strategy has set the foundation for the Company’s future. Capitalizing on this strong foundation and the continued execution of the GSG plan which remains core to Gildan’s business, today Vince Tyra outlined his key focus strategic priorities to unlock further growth potential while amplifying the company’s commercial capabilities. These five key priorities are:
- Successfully execute supply chain initiatives to maintain availability, cost leadership and industry leading margins;
- Leverage Gildan’s unique brands and develop distinct commercial capabilities to accelerate growth and strengthen the Company’s market position;
- Deepen Gildan’s relationships with existing and prospective retail partners, strengthening the Company’s position as the supplier of choice;
- Complement Gildan’s strong North American market position with renewed focus on select international markets to drive growth; and
- Empower and build world-class talent and leadership to ensure long term resilience of Gildan’s business.
Medium-term Targets
Assuming no deterioration in the current macroeconomic environment, Gildan is confident that the targeted priorities will position the company to continue to drive market share gains in key product categories, unlock further opportunities in targeted markets and deliver on key financial metrics over the 2025-2028 period, reflecting the following:
- Net sales growth at a compound annual growth rate in the mid-single digits range
- Annual adjusted operating margin(1) in the range of 18 to 21 percent
- Capital expenditures (capex) as a percentage of sales of about 5 percent per year, on average, to support long-term growth and vertical integration
- Adjusted diluted EPS(2) growth per annum in the high-single to low double-digit range
Gildan expects to maintain its capital allocation priorities which, beyond planned capex deployment, focus on annual dividend growth, continued share repurchases now in line with a leverage framework of 1.5x to 2x, and value accretive M&A. The combination of the above is expected to drive strong shareholder returns.
2024 Outlook and preliminary Q1 2024 revenue
Gildan today reconfirmed its 2024 full year guidance as announced on February 21, 2024 in its Q4 2023 press release as well as the assumptions underpinning this guidance:
- Revenue growth for the full year to be flat to up low-single digits;
- Adjusted operating margin(1) slightly above the high end of the 18 to 20 percent annual target range. This compares to fiscal 2023 adjusted operating margin of 17.3 percent; fiscal 2023 operating margin was 20.1 percent.
- Capex to come in at approximately 5 percent of sales;
- Adjusted diluted EPS(2) in the range of $2.92 to $3.07, up significantly between 13.5 and 19.5 percent year-over-year. This compares to 2023 adjusted diluted EPS of $2.57; fiscal 2023 GAAP diluted EPS was $3.03;
- Free cash flow above 2023 levels driven by increased profitability, lower working capital investments and lower capital expenditures than in 2023.
In addition, Gildan today announced that its preliminary Q1 2024 net sales are expected to come in at approximately $695 million, or down about 1 percent year over year, as previewed in our Q4 2023 press release.
The above outlook as well as the medium-term targets assume no meaningful deterioration from current market conditions including the pricing and inflationary environment, and no further deterioration in geopolitical environments. They reflect reasonable industry growth and expected market share gains. Though the timing of the potential enactment of legislation remains uncertain, we have also incorporated the estimated impact of the implementation of draft Global Minimum Tax legislation in Canada and Barbados on our effective tax rate, retroactive to January 1, 2024, as well as certain refundable tax credits expected. In addition, they reflect Gildan’s expectations as of April 15, 2024 and are subject to significant risks and business uncertainties, including those factors described under “Forward-Looking Statements” in this press release and the annual MD&A for the year ended December 31, 2023.
Posted: April 16, 2024
Source: Gildan
