Gildan Activewear Inc.
NYSE : GIL
TSX : GIL

Gildan Activewear Inc.

February 04, 2015 16:28 ET

Gildan Activewear Announces Agreement to Acquire Comfort Colors for $100 Million

Enhances Gildan's Strategy to Increase Penetration in Fashion Basics Segment of Printwear Market

MONTRÉAL, QUÉBEC--(Marketwired - Feb. 4, 2015) - Gildan Activewear Inc. (TSX:GIL)(NYSE:GIL) today announced that it has signed a definitive agreement to acquire substantially all of the assets of Comfort Colors, the leading supplier of garment-dyed undecorated basic T-shirts and sweatshirts for the North American printwear market, for a total purchase price of approximately U.S. $100 million. The purchase consideration will be paid in cash and will be financed out of Gildan's bank credit facility. The acquisition is subject to customary closing conditions and is expected to close by the end of the current calendar quarter.

Comfort Colors markets its products under the Comfort Colors® brand, which is one of the most recognized brands among consumers purchasing from college bookstores, specialty retail stores, destination and resort shops. Comfort Colors purchases prepared-for-dye garments from third-party vendors, including Gildan. The garments are subsequently treated through a customized in-house dyeing process, giving the shirts a trendy distressed or worn look and a soft and a comfortable feel.

The acquisition of Comfort Colors reinforces Gildan's strategy to increase its penetration of the growing fashion basics segment of the North American printwear market. Comfort Colors has generated strong annual sales growth over the last four years reflecting the brand's fast growing consumer appeal. During the twelve-month period ended December 31, 2014, Comfort Colors generated net sales of approximately U.S. $95 million, or U.S. $55 million after eliminating Gildan sales of undecorated shirts to Comfort Colors. EPS accretion in the balance of calendar 2015 from the acquisition is projected to be approximately U.S. $0.05 after reflecting the amortization of intangible assets and a non-recurring acquisition-related inventory charge. The Company projects EPS accretion in excess of U.S. $0.20 once the integration of the acquisition is complete, including projected revenue and cost synergies and continued organic growth.

Comfort Colors is headquartered in Northfield, Vermont and has dyeing, packaging and distribution operations in facilities in Northfield, Vermont and New Bedford, Massachusetts.

About Gildan

Gildan is a leading supplier of quality branded basic family apparel, including T-shirts, fleece, sport shirts, underwear, socks, hosiery and shapewear. The Company sells its products under a diversified portfolio of company-owned brands, including the Gildan®, Gold Toe® and Anvil® brands and brand extensions, as well as the Secret®, Silks® and Therapy Plus™ brands. The Company also has the U.S. sock license for Under Armour®, and licenses for Mossy Oak® and New Balance® brands. The Company distributes its products in printwear markets in the U.S. and Canada, as well as in Europe, Asia Pacific and Latin America. The Company also markets its products to a broad spectrum of retailers in the U.S. and Canada. The Company also manufactures for select leading global athletic and lifestyle consumer brands.

Gildan owns and operates vertically-integrated, large-scale manufacturing facilities which are primarily located in Central America and the Caribbean Basin to efficiently service the quick replenishment needs of its customers in the printwear and retail markets. Gildan has over 43,000 employees worldwide and is committed to industry-leading labour and environmental practices in all of its facilities. More information about the Company and its corporate citizenship practices and initiatives can be found at its corporate websites www.gildan.com and www.genuinegildan.com, respectively.

Forward-Looking Statements

Certain statements included in this press release constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities legislation and regulations, and are subject to important risks, uncertainties and assumptions. This forward-looking information includes, amongst others, information with respect to our objectives and the strategies to achieve these objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimates and intentions, including, without limitation, our expectation with regards to earnings per share accretion, revenue and cost synergies, and sales growth. Forward-looking statements generally can be identified by the use of conditional or forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "project", "assume", "anticipate", "plan", "foresee", "believe" or "continue" or the negatives of these terms or variations of them or similar terminology. We refer you to the Company's filings with the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission, as well as the risks described under the "Financial Risk Management", "Critical Accounting Estimates and Judgments" and "Risks and Uncertainties" sections in our most recent Management's Discussion and Analysis for a discussion of the various factors that may affect the Company's future results. Material factors and assumptions that were applied in drawing a conclusion or making a forecast or projection are also set out throughout this document.

Forward-looking information is inherently uncertain and the results or events predicted in such forward-looking information may differ materially from actual results or events. Material factors, which could cause actual results or events to differ materially from a conclusion, forecast or projection in such forward-looking information, include, but are not limited to:

  • our ability to implement our growth strategies and plans, including achieving market share gains, obtaining and successfully introducing new sales programs, increasing capacity, implementing cost reduction initiatives and completing and successfully integrating acquisitions, including the proposed acquisition of Comfort Colors;
  • the intensity of competitive activity and our ability to compete effectively;
  • adverse changes in general economic and financial conditions globally or in one or more of the markets we serve;
  • our reliance on a small number of significant customers;
  • the fact that our customers do not commit contractually to minimum quantity purchases;
  • our ability to anticipate, identify or react to changes in consumer preferences and trends;
  • our ability to manage production and inventory levels effectively in relation to changes in customer demand;
  • fluctuations and volatility in the price of raw materials used to manufacture our products, such as cotton, polyester fibres, dyes and other chemicals;
  • our dependence on key suppliers and our ability to maintain an uninterrupted supply of raw materials and finished goods;
  • the impact of climate, political, social and economic risks in the countries in which we operate or from which we source production;
  • disruption to manufacturing and distribution activities due to such factors as operational issues, disruptions in transportation logistic functions, labour disruptions, political or social instability, bad weather, natural disasters, pandemics and other unforeseen adverse events;
  • changes to international trade legislation that the Company is currently relying on in conducting its manufacturing operations or the application of safeguards thereunder;
  • factors or circumstances that could increase our effective income tax rate, including the outcome of any tax audits or changes to applicable tax laws or treaties;
  • compliance with applicable environmental, tax, trade, employment, health and safety, anti-corruption, privacy and other laws and regulations in the jurisdictions in which we operate;
  • our significant reliance on computerized information systems for our business operations, including our JD Edwards Enterprise Resource Planning (ERP) system which is currently being upgraded to the latest system release, Enterprise One;
  • adverse changes in third party licensing arrangements and licensed brands;
  • our ability to protect our intellectual property rights;
  • changes in our relationship with our employees or changes to domestic and foreign employment laws and regulations;
  • negative publicity as a result of actual, alleged or perceived violations of labour and environmental laws or international labour standards, or unethical labour or other business practices by the Company or one of its third-party contractors;
  • our dependence on key management and our ability to attract and/or retain key personnel;
  • changes to and failure to comply with consumer product safety laws and regulations;
  • changes in accounting policies and estimates;
  • exposure to risks arising from financial instruments, including credit risk, liquidity risk, foreign currency risk and interest rate risk, as well as risks arising from commodity prices;
  • the adverse impact of any current or future legal and regulatory actions; and
  • an actual or perceived breach of data security.

These factors may cause the Company's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. Forward-looking statements do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made, may have on the Company's business. For example, they do not include the effect of business dispositions, acquisitions, other business transactions, asset write-downs, asset impairment losses or other charges announced or occurring after forward-looking statements are made. The financial impact of such transactions and non-recurring and other special items can be complex and necessarily depends on the facts particular to each of them.

There can be no assurance that the expectations represented by our forward-looking statements will prove to be correct. The purpose of the forward-looking statements is to provide the reader with a description of management's expectations regarding the Company's future financial performance and may not be appropriate for other purposes. Furthermore, unless otherwise stated, the forward-looking statements contained in this press release are made as of the date of this press release, and we do not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise unless required by applicable legislation or regulation. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

Contact Information

  • Investor Relations
    Sophie Argiriou,
    Vice-President,
    Investor Communications
    (514) 343-8815
    sargiriou@gildan.com

    Media Relations
    Anik Trudel,
    Vice-President,
    Corporate Communications
    (514) 340-8919
    atrudel@gildan.com