Gildan Activewear Announces Agreement to Acquire Marketer and
Manufacturer of Branded Sheer Hosiery, Legwear and Shapewear
- Owner of Secret(R), Silks(R), TherapyPlus(R) and Kushyfoot(R)
Brands
- Provides Platform for Distribution of Gildan(R) and Gold
Toe(R) Brands in Canada
- Enhances Product Offering as Full-Line Supplier of Basic
Family Apparel in U.S.
- Provides Strong Presence in Food and Drug Channel and Entry
into Ladies Intimates Category
MONTREAL, QUEBEC--(Marketwired - Jun 19, 2014) - Gildan
Activewear Inc. (TSX:GIL)(NYSE:GIL) today announced that it has
signed a definitive agreement to acquire substantially all of the
assets of Doris Inc. (Doris), a marketer and manufacturer of
branded sheer hosiery, legwear and shapewear products to retailers
in Canada and the United States. The initial purchase price is
approximately CDN $110 million (U.S. $101.4 million), with possible
additional contingent payments of up to CDN $10 million (U.S. $9.2
million), which are based on the achievement of targets for growth
in sales revenues. The purchase consideration will be paid in cash
and will be financed out of Gildan's bank credit facility.
Doris is the third largest marketer of branded ladies legwear in
North America and the market leader in Canada, with products sold
throughout all retail channels of distribution. Its company-owned
brands include Secret®, one of the most recognized sheer pantyhose
brands and a growing brand for shapewear in Canada, the Silks®
brand, and TherapyPlus®, which provides therapeutic legwear
solutions for medical conditions and everyday activities. Doris
also markets its brands including Kushyfoot® and TherapyPlus® in
the U.S. Revenues in the U.S. account for close to 30% of Doris'
total sales. In addition, Doris has brand licenses and supplies
selective retailer private label programs.
Revenues of Doris for the year ended March 31, 2014 amounted to
approximately CDN $95 million (U.S. $87.6 million), and adjusted
EBITDA for the same period amounted to approximately CDN $14
million (U.S. $12.9 million), so that the acquisition is expected
to be immediately accretive to Gildan's earnings in fiscal
2015.
The acquisition of Doris immediately provides Gildan with a strong
sales organization and platform for retail distribution of the
Gildan® and Gold Toe® brands in Canada. The acquisition also
further enhances the Company's consumer brand portfolio within its
existing U.S. retail distribution and positions it to increase its
penetration in the basic women's apparel markets. It will position
the Company for entry into the ladies intimates' category and, in
addition, further broadens the Company's retail distribution
network in the United States due to Doris' strong presence in the
food and drug channel.
Doris' head office is located in Montréal, Québec. Doris operates a
distribution facility and a sheer hosiery manufacturing facility
with knitting, dyeing and packaging capabilities in Montréal.
Approximately half of Doris' production is vertically-integrated.
Doris' management team, including the founder's son, President and
Chief Executive Officer Jack Hasen, will join Gildan and contribute
to the further development of Gildan's Canadian retail branding
strategy.
The acquisition is subject to customary closing conditions and is
expected to close in early July 2014.
About Gildan
Gildan is a leading supplier of quality branded basic family
apparel, including T-shirts, fleece, sport shirts, socks and
underwear. 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 under licensing
arrangements for the Under Armour®, Mossy Oak® and New Balance®
brands. The Company distributes its products in printwear markets
in the U.S. and Canada, where Gildan® is the industry-leading
brand, and the Company is increasing its penetration in
international printwear markets. The Company is also one of the
largest suppliers of branded athletic, casual and dress socks for a
broad spectrum of retailers in the U.S. The Company is also
developing Gildan® as a consumer brand for underwear and
activewear.
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
replenishment needs of its customers in the printwear and retail
markets. Gildan has approximately 39,000 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 accretion and revenue growth synergies from the announced
acquisition. 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 of the 2013
Annual MD&A 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 announced
acquisition;
- 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 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;
- 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;
- adverse changes in third party licensing arrangements and
licensed brands;
- our ability to protect our intellectual property
rights;
- 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;
and
- the adverse impact of any current or future legal and
regulatory actions.
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.
Non-GAAP Financial Measures
This press release includes reference to adjusted EBITDA, which
is a non-GAAP financial measure. This non-GAAP measure does not
have any standardized meaning prescribed by International Financial
Reporting Standards (IFRS) and is therefore unlikely to be
comparable to similar measures presented by other companies.
Accordingly, it should not be considered in isolation. Adjusted
EBITDA is calculated as earnings before financial expenses, income
taxes and depreciation and amortization and excludes the impact of
restructuring and acquisition-related costs. The Company uses
adjusted EBITDA, among other measures, to assess the operating
performance of its business. The Company also believes this measure
is commonly used by investors and analysts to measure a company's
ability to service debt and to meet other payment obligations, or
as a common valuation measurement. The Company excludes
depreciation and amortization expenses, which are non-cash in
nature and can vary significantly depending upon accounting methods
or non-operating factors such as historical cost.
Excluding these items does not imply they are necessarily
non-recurring.
Gildan Activewear Inc. - Investor RelationsSophie
ArgiriouVice-President, Investor Communications(514)
343-8815sargiriou@gildan.comGildan Activewear Inc. - Media
RelationsAnik TrudelVice-President, Corporate Communications(514)
340-8919atrudel@gildan.com
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