Shares of apparel makers have come under pressure Thursday morning after Gildan Activewear Inc. (GIL) reported lower fourth quarter earnings growth and issued disappointing guidance, while Lululemon Athletica Inc. (LULU) also cut its 2008 fiscal year outlook.
Gildan Activewear shares have tumbled about 31%, while Lululemon Athletica stock has plummeted about 23%.
Around 11:05 am Eastern Time, shares of Gildan Activewear were down $4.41 at $9.76, while Lululemon Athletica shares were down $2.54 at $7.92.
Other stocks within the sector posting notable losses include Hanesbrands Inc. (HBI), Oxford Industries Inc. (OXM), Maidenform Brands Inc. (MFB), True Religion Apparel (TRLG), Phillips-Van Heusen Corp. (PVH), Quiksilver Inc. (ZQK) and G-III Apparel Group Ltd. (GIII)
Before the opening bell on Thursday, Gildan Activewear reported fourth quarter net earnings of $21.4 million or $0.18 per share, compared to $40.9 million or $0.34 per share in the same period last year.
Adjusted net earnings for the quarter were $22.4 million, compared to $45.8 million in the prior year quarter. Excluding the impact of a tax charge, adjusted net earnings in the fourth quarter of fiscal 2008 were $49.3 million or $0.41 per share.
Sales for the quarter rose 27.4% to $324.7 million from $254.9 million in same quarter last year. The increase in sales revenues was due to the impact of the acquisition of Prewett, an approximate 10.2% increase in activewear unit selling prices and an 8.5% increase in unit sales volumes for activewear and underwear.
Analysts polled by First Call/Thomson Financial expected the company to report earnings for the quarter of $0.43 per share on $341.36 million in sales.
Looking ahead, the company said it is currently forecasting first quarter adjusted earnings of approximately $0.00-$0.05 per share, compared with adjusted earnings of $0.23 per share in the first quarter of fiscal 2008.
The company also said it is initiating earnings guidance for fiscal 2009 with a wide range of $1.10-$1.30 per share, excluding restructuring charges, which are not expected to be material.
Analysts expect the company to report earnings per share of $0.25 for the first quarter and $1.86 for fiscal 2009.
Additionally, before Thursday's opening bell, Lululemon Athletica reported third quarter net income of $8.83 million or $0.13 per share, compared to $7.57 million or $0.11 per share last year.
Net income from continuing operations was $8.83 million or $0.13 per share, higher than $7.9 million or $0.12 per share in the prior-year quarter.
On average, twelve analysts polled by First Call/Thomson financial expected the company to report earnings of $0.12 per share. Analysts' estimates typically exclude special items.
Net revenue grew to $87.05 million from $64.93 million in the comparable period a year ago. Seven analysts had a consensus revenue estimate of $86.5 million.
The company expects earnings for the fourth quarter to be in the range of $0.15-$0.17 per share. Analysts expect earnings of $0.26 per share.
For fiscal 2008, the company now expects earnings in the range of $0.55-$0.57 per share, compared to its previous range of $0.68-$0.71 per share. The company lowered its full year net revenue outlook to a range of $340 million-$345 million from the previous range between $380 million and $385 million.
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