Cotton prices spiked last year. How did the company manage through that?
MERYL WITMER : The stock fell from the high $30s as
cotton dropped to about 70 cents a pound after spiking to more than $2.
Gildan's customers are small and the company decided to take the hit
itself when prices plummeted. As a result it will earn about $1.30 a
share in the fiscal year ending September, instead of $2.60. Next year,
as the high-cost cotton moves out of their inventory, earnings should
rebound to between $2.50 and $3 a share, and grow thereafter. Gildan has
been perennially capacity constrained and recently completed a big
addition that will increase capacity by 40%. If it can utilize that
capacity in the next few years, earnings will be 40% higher, to $3.50 to
$4 a share. - in the Baron's Roundtable June 2012
.jfif)
