MONTREAL — Gildan Activewear Inc. says it is laying off 1,700 employees in Mexico, where it will close its two textile and sewing plants before April amid weak sales and higher costs.
The Montreal-based clothing manufacturer says that it will be relocating the equipment from Mexico to its facilities in Central America and the Caribbean.
A spokeswoman for Gildan confirms to The Canadian Press that the closures will result in 1,700 jobs cut.
Gildan, which reports in U.S. dollars, says net income fell more than eight per cent year over year to US$104.9 million in its third quarter.
The company points to “weaker” demand for imprintable apparel and lower sock sales, which more than offset strong “activewear” sales last quarter. It says higher manufacturing costs and an expected rise in raw material prices added to the softer earnings.
Sales fell two per cent to $740 million in the quarter ended Sept. 29 compared to the same period in 2018. On an adjusted basis, diluted earnings per share dropped seven per cent to 53 cents, slightly below analyst expectations of 54 cents, according to financial markets data firm Refinitiv.
Two weeks ago Gildan shares plunged nearly 26 per cent after the company cut its financial forecast for 2019 and warned third- and fourth-quarter earnings would shrink.
Nonetheless, Gildan says the earnings do not reflect a structural change in its business and that sales to retailers remain “largely on track.”
The company’s spokeswoman says it “regrets the impact” the layoffs will have on its workers and “does not take these decisions lightly.”
Companies in this story: (TSX:GIL)
This report by The Canadian Press was first published Oct. 31, 2019.
The Canadian Press