by ROSS MAROWITS, THE CANADIAN PRESS
MONTREAL – Gildan Activewear is expanding its low-cost manufacturing presence by entering Mexico with the acquisition of the apparel division of Ennis Inc. for US$110 million.
The Montreal-based company said Wednesday it has signed a deal to buy the equity interest of Alstyle Apparel, which makes T-shirts and fleece products largely sold under the Alstyle brand to screenprinters and mass marketers in the U.S., Canada and Mexico.
Alstyle operates a large textile facility along with cutting and sewing operations in Mexico, as well as distribution centres across North America.
Gildan (TSX:GIL) says the acquisition, which is slated to close the end of June, broadens its position in the Western United States where Alstyle has a strong presence.
It also enhances the company’s competitive retail position in Mexico and allows Gildan to take advantage of trade agreements that provide duty-free access to market in South America.
Gildan says Alstyle will be integrated into its printwear business and realize cost savings after being aligned with its own operations.
Alstyle generated about US$19 million in pre-tax profits on US$183 million of revenues in the last fiscal year.
Meanwhile, Gildan says its net profit increased 12.9 per cent to US$63.2 million in the first quarter despite lower sales.
Adjusted income for the three months ended April 3 was US$69 million or 28 cents per share, up from US$57.5 million a year ago.
Revenues fell 6.7 per cent to US$593.3 million.
Gildan says it continues to expect to post US$1.50 to US$1.60 per share in adjusted earnings on more than US$2.6 billion of sales with branded apparel piercing US$1 billion.
Gildan makes T-shirts, fleece, underwear, socks and other apparel products at large manufacturing facilities in Central Ameria, the Caribbean Basin, Bangladesh and the United States that employ more than 42,000 employees.