Gildan says proxy battle cost US$57 million in Q2 as Glenn Chamandy returns to helm
As Gildan Activewear Inc. gears up for its 40th anniversary, the Montreal-based company is ready to put a recent leadership battle in the rearview mirror.
Glenn Chamandy was reinstated as CEO in May after a months-long public struggle pitting several major shareholders against the company's board, which terminated the co-founder last year.
That leadership struggle cost Gildan US$57.2 million in the second quarter, denting its earnings -- the company brought in US$58.4 million, down from US$155.3 million a year earlier as higher income taxes also took a bite.
Speaking to analysts on a call Thursday, Chamandy didn't dwell on the leadership battle. He thanked employees, shareholders, customers and the new board for their support.
"Last fall, I communicated to shareholders that Gildan's positioning had never been stronger," he said. "Today I can confirm that everything is on track."
"Now that I'm back," he added, "I can see that everything is intact."
Several shareholders, led by activist investor Browning West, campaigned to have Chamandy reinstated after he was replaced by Vince Tyra. Browning West announced on May 24 that its campaign had been successful, as Gildan's board and its new CEO stepped aside after preliminary votes showed they didn't have shareholder support.
Reported costs related to the proxy fight included US$18 million for advisory fees, US$21.6 million for severance costs and US$7.8 million for expenses related to Chamandy's firing and subsequent reinstatement.
The company also saw higher expenses from income tax, after the enactment of the global minimum tax in Canada and Barbados. It said the impact, retroactive to the start of the year, pushed its adjusted effective income tax rate to 27.2 per cent for the quarter, up from 4.8 per cent last year.
The increase left income tax expenses at US$58.5 million for the quarter, up from US$6.7 million last year.
Gildan said its adjusted net income worked out to US$124.7 million, up from US$112.3 million last year. Net sales for the quarter came in at US$862.2 million, up from US$840.4 million last year.
International sales were up by seven per cent, while sales in the hosiery and underwear category were down 16 per cent, which the company attributed mainly to the phase-out of an Under Armour licensing agreement.
Gildan's executive vice-president and chief financial and administrative officer Rhodri Harries said the company saw higher activewear shipments during the quarter.
Chamandy said Gildan's ramp-up of its Bangladesh facility is on track, and said recent civil unrest in the country didn't have a material impact despite a short disruption.
Harries said despite a "mixed" global macroeconomic backdrop with cautious consumer spending, the company is reiterating its previous guidance for 2024.
Gildan expects revenue growth for the full year to be flat to up low-single digits, and expects its adjusted diluted earnings per share to rise between 13.5 per cent and 18.5 per cent year over year.
The company also provided a three-year outlook that sees net sales growth at a compound annual growth rate in the mid-single digits, and adjusted diluted earnings per share growth at a compound annual growth rate in the mid-teen range.
"Assuming no deterioration in the current macroeconomic environment, Gildan is confident that its targeted priorities will position the company to continue to drive market share gains," the company said in its release.
This report by The Canadian Press was first published Aug. 1, 2024.
CTVNews.ca Top Stories
Polls close for closely watched byelections in Montreal and Winnipeg
The NDP has a slight early lead in Winnipeg while remaining in a three-way race with the Liberals and the Bloc Québécois in Montreal as ballots continue to be counted in two crucial federal byelections.
GoFundMe cancels fundraiser for Ontario woman charged with spraying neighbour with a water gun
A Simcoe, Ont., woman charged with assault with a weapon after accidentally spraying her neighbour with a water gun says GoFundMe has now pulled the plug on her online fundraiser.
Freeland says she is 'not going anywhere' after Conservatives call her 'phantom finance minister'
Deputy Prime Minister Chrystia Freeland declared she is 'not going anywhere' when pushed by the Conservatives on Monday about her future as finance minister.
Suspect in apparent assassination attempt on Trump was near golf course for 12 hours
The man suspected in an apparent assassination attempt targeting Donald Trump camped outside a golf course with food and a rifle for nearly 12 hours.
Body recovered from B.C. lake after unclothed man leads investigators to crash site
Mounties are investigating a fatal crash north of Whistler, B.C., after an unclothed man who was found along the side of the road led police to a pickup truck submerged in a lake with one occupant still inside.
'Never seen anything like this': Humpback whale catches unsuspecting seal off Vancouver Island
A Vancouver Island nature photographer says he has never seen anything like what his camera captured on a recent whale-watching excursion off Victoria.
'Not that simple': Trump drags Canadian river into California's water problems
Republican presidential nominee Donald Trump promised "more water than you ever saw" to Californians, partly by tapping resources from a Canadian river.
Mortgage loan rules are changing in Canada
Finance Minister Chrystia Freeland has announced changes to mortgage rules she says are aimed at helping more Canadians to purchase their first home.
First teen sentenced in Kenneth Lee case gets 15 months probation
The first teenager to be sentenced in the death of a Toronto homeless man will not face further time in custody, and instead participate in a community-based program.