* Raises full-year sales and gross margin forecasts (Adds analyst comment, details, byline; In U.S. dollars unless noted)
By S. John Tilak
TORONTO, May 11 (Reuters) - Clothing maker Gildan Activewear Inc (GIL.TO) (GIL.N) reported a higher quarterly profit on Wednesday, topping analyst estimates, as price increases and greater sales volumes overshadowed a rise in raw material costs.
The maker of basic clothing items such as T-shirts, socks and underwear also raised its full-year outlook on the back of the recently announced acquisition of U.S.-based sock maker Gold Toe Moretz Holdings for about $350 million and more planned price increases.
Montreal-based Gildan and other clothing manufacturers have been grappling with the higher cost of raw materials, especially cotton. The price increases are expected to ease some of the margin pressure.
The company is a top supplier to the screenprint market in the United States and Canada, with a market share of more than 60 percent. It sells blank T-shirts, sport shirts and fleece, which are then printed with designs and logos.
Its market share declined marginally in the quarter.
That was a reflection of the tight supply chain, Stonecap Securities analyst Scott Rattee said.
“They are still the price leader,” Rattee said. “They will have the market share back when they’re able to get the inventory back where they want them.”
Gildan raised its full-year sales forecast to some $1.8 billion, from about $1.6 billion. It expects gross margins of roughly 25.5 percent, compared with its earlier forecast of about 25 percent.
Earnings for the second quarter that ended April 3, rose to $61.4 million, or 50 cents a share, from $48.8 million, or 40 cents a share, a year earlier. Adjusting for special items, its profit was 53 cents a share.
Analysts on average were looking for earnings of 49 cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 17 percent to $383.2 million, compared with the average analyst estimate of $382.5 million.
Sales of the company’s activewear and underwear products rose 25.3 percent in the quarter, aided by a 19 percent rise in average net selling prices for activewear and a 6.1 percent rise in unit volume shipments. (Reporting by S. John Tilak; Editing by Dave Zimmerman and Maureen Bavdek)