Canadian Manufacturing

Montreal’s Gildan Activewear buys Comfort Colors for US$100M

Gildan said deal to buy garment-dyed shirt maker will complement its own efforts to go after younger consumers



MONTREAL—Gildan Activewear Inc. is targeting the college crowd by paying US$100 million to acquire the leading supplier of garment-dyed T-shirts and sweatshirts for the North American printwear market.

The Montreal-based company said the purchase of Vermont-based Comfort Colors, which has US$95 million of annual sales, will complement its own efforts to go after younger consumers.

“It’s been a success story in our industry,” CEO Glenn Chamandy said after announcing the deal and Gildan’s quarterly results.

“The college kids are basically really raving about this type of product.”

Comfort Colors dyes blank shirts sold by Gildan and other suppliers into a garment with a weathered look that is also popular with resorts and bookstores.

Comfort Colors sales, which are distributed through many of the same locations as Gildan, have increased 20 per cent annually over the last four years.

Chamandy said the biggest challenge will be to produce enough product because capacity is constantly sold out.

He also sees growth opportunities in Canada and Europe because all of Comfort Colors’ sales are in the United States.

Gildan said it lost US$41.2 million in the fourth quarter, surprising analyst who had expected a profit.

The loss equalled 34 cents per diluted share for the three months ended Jan. 4 compared with a net profit of US$41.7 million or 34 cents per share a year ago.

Adjusting for one-time items, it lost US$37.6 million or 31 cents per share in the quarter, compared with a profit of $43.3 million or 35 cents per share in the prior year.

Sales decreased 13.5 per cent to US$390.6 million as lower revenues from T-shirts sold to printers was partially offset by 20 per cent growth in Gildan-branded products.

Gildan was expected to earn 30 cents per share on US$400.7 million of revenues, according to analysts polled by Thomson Reuters.

The company, which reported after markets closed, also announced a two-for-one stock split effective March 27.

Gildan also said it has signed country music superstar Blake Shelton as an “all-American” pitchman as it seeks to grow its market share to more than 10 per cent.

Its market share was 6.2 per cent in the last quarter, double that of the prior year.

“As a real Oklahoma guy who likes to kick back in comfort at the end of the day, I am excited to promote Gildan,” said Shelton, who is also the coach on reality TV show ‘The Voice.’

Gildan plans to spend an extra US$15 million next year to promote its branded product by using Shelton in advertising campaigns.

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