Gildan Activewear Announces First Quarter Earnings in Excess of Previous Guidance

Gildan Activewear Announces First Quarter Earnings in Excess of
Previous Guidance
- E.P.S. up 64.7% From Last Year, and U.S. $0.03 Above Top End of Previously
Communicated Guidance Range - 


MONTREAL, Feb. 1  /PRNewswire-FirstCall/ -- Gildan Activewear Inc. (NYSE: GIL;
TSX: GIL.A) today announced its financial results for the first quarter of its
2005 fiscal year, ended January 2, 2005.

The Company reported record net earnings for the first quarter of a fiscal year
of U.S. $8.4 million or U.S. $0.28 per share, on a diluted basis, compared with
U.S. $2.9 million or U.S. $0.10 per share in the first quarter of fiscal 2004.
After adjusting prior year results for the impact on cost of sales of revaluing
opening inventories, due to the adoption of the U.S. dollar as the Company's
functional currency with effect from October 6, 2003, net earnings in the first
quarter of fiscal 2004 were U.S. $5.0 million or U.S. $0.17 per share. The
year-over-year increase in net earnings and diluted E.P.S. was 68.0% and 64.7%
respectively.

The Company had provided E.P.S. guidance of U.S. $0.20-$0.25 for the first
quarter of fiscal 2005.

Compared to last year, the increase in first quarter net earnings was driven by
continuing growth in unit sales volumes, higher selling prices and more
favourable product-mix, together with the continuing ramp-up of the Rio Nance
textile facility. These positive factors were partially offset by higher SG&A
expenses, increased costs for cotton, energy and transportation and the impact
of lower capacity utilization on the efficiency of Gildan's Canadian
yarn-spinning operations.

"We are pleased to have again delivered sales and earnings performance in
excess of expectations," commented Glenn J. Chamandy, President and Chief
Executive Officer. "Industry conditions continue to be strong, and the Gildan
brand continues to have excellent momentum in all of our served markets."

Sales in the first quarter were U.S. $109.0 million, representing an increase
of 39.8% over the first quarter of fiscal 2004. The significant growth in sales
revenues was due to improved selling prices, a 27.5% increase in unit sales
volumes, and a higher-valued product-mix within the T-shirt category.

The S.T.A.R.S. market and market share data for the U.S. wholesale distributor
market for the fourth quarter of calendar 2004 excludes sales by three large
distributors who have discontinued their participation in the report and the
value of the report is therefore reduced compared to prior years. With this
caveat, the table below summarizes the S.T.A.R.S. data for the quarter ended
December 31, 2004. In calculating year-over-year growth rates, S.T.A.R.S. has
adjusted prior period comparatives to exclude sales through distributors no
longer participating in the S.T.A.R.S. report. Although prior year market share
data have not been restated on a comparable basis by S.T.A.R.S., this
information has been extrapolated from the information provided in the
S.T.A.R.S. report.

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During the first quarter of fiscal 2005, Gildan also experienced strong growth
with non-S.T.A.R.S. distributors.

Gross margins in the first quarter were 29.7%, compared with 27.1% in the first
quarter of fiscal 2004. Before the impact of the functional currency adjustment
on cost of sales in the first quarter of last year, comparative gross margins
were 29.8%. The positive gross margin impact of higher selling prices and more
favourable product-mix was offset by higher cotton, energy and transportation
costs and higher costs for the Canadian yarn-spinning operations.

Selling, general and administrative expenses were U.S. $16.3 million, or 15.0%
of sales, up 43.0% from U.S. $11.4 million, or 14.6% of sales in the first
quarter of last year. In addition to reflecting the continuing development of
the organization to manage the Company's growth and expansion plans, SG&A
expenses increased due to the strengthening of the Canadian dollar, the timing
of professional and consulting fees and increased volume- related selling and
distribution costs. As a percentage of sales, SG&A is higher in the first
quarter as this is seasonally the lowest sales quarter in the fiscal year.

The Company reduced its cash position by U.S. $8.3 million during the quarter,
after financing U.S. $22.1 million of capital expenditures and its seasonal
build-up of inventories for the peak summer selling season. Inventories
increased by U.S. $25.8 million during the first quarter. Capital expenditures
were primarily incurred for the new textile facility which the Company is
constructing in the Dominican Republic, and the expansion of the Company's U.S.
distribution centre to prepare for entry into the retail channel. The Company
ended the first quarter with cash and cash equivalents of U.S. $52.4 million.

The Company is maintaining its full year diluted E.P.S. guidance of
approximately U.S. $2.60 per share, before a special charge for the closure of
its Canadian yarn-spinning facilities. The Company has issued a separate Press
Release, concurrent with this earnings release, in which it announces the
closure of its Canadian yarn-spinning facilities, and the relocation of the
majority of its yarn-spinning assets to a new joint venture facility in the
U.S. The resulting special charge, estimated at approximately U.S. $7.8 million
after-tax or $0.26 per diluted share, will be reflected in the second quarter
of fiscal 2005. After taking account of this charge, full year diluted E.P.S.
is estimated at approximately U.S. $2.34. As previously indicated, the
Company's full year earnings guidance reflects unit sales growth of
approximately 20% over fiscal 2004, which will fully utilize the Company's
available production capacity, and also assumes sequentially lower unit selling
prices in the second half of the fiscal year, reflecting the possible
flow-through of lower cotton prices. On this basis, full year sales are
projected at approximately U.S. $640 million, up approximately 20% from U.S.
$533 million in fiscal 2004.

The Company indicated that it expected to achieve diluted E.P.S. of U.S. $0.60
- U.S. $0.65 in the second quarter of fiscal 2005 before the special charge, up
15% - 25% from the second quarter of fiscal 2004, after increasing the prior
year comparative results as reported to reflect the functional currency
adjustment impacting cost of sales in the second quarter of last year. Diluted
E.P.S. in the second quarter of fiscal 2005 are projected at U.S. $0.34 - U.S.
$0.39, after the special charge for the closure of the yarn-spinning
facilities.

  Shares Issued and Outstanding
  -----------------------------


As of January 31, 2005 there were 29,722,207 Class A Subordinate Voting Shares
issued and outstanding along with 549,896 options outstanding. There were no
Class B Multiple Voting Shares outstanding and shareholders will be asked to
approve the elimination of this class of shares at the Company's Annual and
Special Meeting of Shareholders on February 2, 2005. Shareholders will also be
asked at the Meeting to create a new class of shares, namely Common Shares, and
to subsequently convert each of the issued and outstanding Class A Subordinate
Voting Shares into one Common share.

  Profile
  -------


Gildan Activewear is a vertically-integrated manufacturer and marketer of
premium quality branded basic activewear for sale principally in the wholesale
imprinted activewear segment of the Canadian, U.S., European and other
international markets. The Company manufactures and sells premium quality 100%
cotton and 50% cotton/50% polyester T-shirts, placket collar sport shirts and
sweatshirts in a variety of weights, sizes, colours and styles. The Company
sells its products as blanks, which are ultimately decorated with designs and
logos for sale to consumers. Gildan employs more than 7,800 full-time
employees.

Certain statements included in this press release may constitute "forward-
looking statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements. We refer you to the Company's filings with the U.S.
Securities and Exchange Commission and Canadian securities regulatory
authorities for a discussion of the various factors that may affect the
Company's future results.

  Information for shareholders
  ----------------------------


Gildan Activewear Inc. will hold a conference call to discuss these results
today at 5:00 PM Eastern Time. The conference call can be accessed by dialing
800-261-3417 (Canada & U.S.) or 617-614-3673 (international) and entering
passcode 39968661, or by live sound web cast on Gildan's Internet site
("Investor Relations" section) at the following address:
http://www.gildan.com/. If you are unable to participate in the conference
call, a replay will be available starting that same day at 7:00 PM EST by
dialing 888-286-8010 (Canada & U.S.) or 617-801-6888 (international) and
entering passcode 93856450, until February 8, 2005 at midnight, or by sound web
cast on Gildan's Internet site for 30 days.

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  Gildan Activewear Inc. - Notes to Interim consolidated financial
  statements

  For complete notes to the interim consolidated financial statements
  please refer to filings with the various securities regulatory
  authorities.

  1. The January 2, 2005 unaudited consolidated financial statements
     include the consolidation of Cedartown Manufacturing LLC ("Cedartown")
     the Company's 50% owned joint venture with Frontier Spinning Mills,
     Inc. Historically, the Company has accounted for its investment in
     Cedartown using the proportionate consolidation method. The
     consolidation of Cedartown at October 4, 2004, the beginning of its
     2005 fiscal year, increased total assets by $7.9 million and total
     liabilities by $5.0 million, while creating a non-controlling interest
     of $2.9 million. The Company's net earnings will not be affected by
     this change.

  2. The Company announced on February 1, 2005 that it will close its two
     Canadian yarn-spinning operations at the end of March 2005. A majority
     of the equipment will be transferred to a new yarn spinning facility
     in Clarkton, North Carolina, which will be operated by the Company's
     yarn-spinning joint-venture with Frontier Spinning Mills Inc. The
     Company anticipates that the closure costs will be approximately
     $7.8  million after tax, or $0.26 per diluted share. The closure costs
     will consist mainly of severance costs and the loss on disposal of
     fixed assets that are not being transferred. This charge will be
     recognized in the second quarter of fiscal 2005.

  3. Certain comparative figures have been reclassified in order to conform
     to the current's year's presentation.


DATASOURCE: GILDAN ACTIVEWEAR INC.



CONTACT: Laurence G. Sellyn, Executive Vice-President,

Finance and Chief Financial Officer, [phone], Email:

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