Gildan Activewear Inc. (NYSE:GIL) Q3 2019 Earnings Conference Call - Final Transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2019 Gildan Activewear Earnings Conference Call. At this time all participant lines are in a listen-only mode. After the speaker's presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to Sophie Argiriou. Please go ahead.

Thank you, Michelle. Good morning to everyone and thank you for joining us. Earlier this morning, we issued our press release announcing our results for the third quarter of 2019. We also issued our interim shareholder report containing management's discussion and analysis and consolidated financial statements. These documents will be filed with the Canadian Securities and Regulatory Authorities and the US Securities Commission and are available on the company's corporate website.

I'm joined here today by Glenn Chamandy, our President and Chief Executive Officer; and Rhod Harries, our Executive Vice President and Chief Financial and Administrative Officer. Momentarily, Rhod will take you through the results for the quarter and our business outlook for the year, and a Q&A session will follow. Before we begin, I would like to remind you that certain statements included in this conference call may constitute forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve unknown and known 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 US Securities and Exchange Commission and the Canadian Securities Regulatory Authorities.

And with that, I'll turn the call over to Rhod.

Thanks, Sophie. Good morning and thank you for joining us. This morning, we reported Q3 results in line with the preliminary results announced on October 17th. Sales of $740 million for the quarter were down 2% compared to last year, reflecting a slight increase in activewear sales of 1.1% offset by a decline in the hosiery and underwear category of 15.1%. The decline in this category on a year-over-year basis was mainly driven by lower sock sales in mass and other retail channels. However, our sales in retail overall were largely as expected as activewear sales came in stronger than expected, offsetting lower-than-expected sales -- sock sales to retailers. The area of softness in our business relative to the expectations we communicated to you at the end of the second quarter was in the imprintable channel in activewear.

As we indicated two weeks ago, during the third quarter, we saw a significantly weaker POS than expected for imprintables in North America, and the softness in international markets that we called out in the first half of the year did not improve as the quarter -- in the quarter as planned. In the US, POS trends in the first half of the year unfolded in line with anticipated trends, and we expected strengthening in the second half given our