Counselor Top 40 supplier Gildan’s (asi/56842) sales are on the rise again, but the firm’s profitability declined, largely due to an epic proxy battle that played out through the first five months of 2024.

The publicly traded company released a financial report Thursday, Aug. 1 that showed total global sales across all of its business channels, including promo and others, rose 2.6% year over year in the second quarter to $862.2 million.

The performance was good enough to lift Gildan’s revenue into growth territory for the half year, overcoming a Q1 setback to create a 1% rise on an annual basis over the first six months of 2024, with sales tallying nearly $1.56 billion during that period.

“I am proud of the Gildan team’s ongoing dedication, delivering a solid top line performance in the second quarter,” said Glenn Chamandy, president and CEO of Gildan.

Gildan’s selling, general and administrative expenses totaled $229 million through the first six months of 2024, up $69 million over the same span in the year prior. The increase was driven by $76.8 million in spending on the proxy fight, leadership changes and related matters, the company said. In the second quarter alone, proxy battle/related costs totaled about $57 million, Gildan said.

The surge in expenses weakened operating income and net income. Net income – bottom line earnings – dropped nearly 46% year over year to $137.1 million during the first six months of 2024, or $0.81 earnings per share. In Q2 in particular, net income retreated 62.4% on an annual basis, registering in at $58.4 million, or $0.35 earnings per share. To be clear, Gildan was still profitable, just less so than a year ago in the comparable timeframes.

And that appears to be that on the #Gildan corporate saga. https://t.co/xaJ8cojpoy

— Chris Ruvo (@ChrisR_ASI) May 28, 2024

The corporate fight began in mid-December 2023 when a previous incarnation of Gildan’s board ousted Chamandy from the company. Backed by activist investors, Chamandy fought to be returned as chief executive, president and board member. He and his allies won, with Chamandy returning in late May and beginning work with a new board that’s loyal to him.

Outlook

While Gildan’s underwear and hosiery business experienced sales declines, the overall revenue gains were a result of increases in the company’s activewear business, which includes sales to the promo market. Activewear sales were up 4% on the half year and 6% in Q2 alone, driven by factors like shipping more product and market share gains in categories like fleece and ring-spun apparel items.

Relatedly, Gildan benefitted from “a positive market response to our recently introduced products featuring key innovations, including our soft cotton technology,” the company said. Activewear sales also rose internationally.

Looking ahead, Gildan believes 2024 total company revenue will be flat or rise in the low single-digit percentage range compared to last year. Over the next three years, Gildan anticipates a compound annual growth rate in the mid-single-digit range.

Michael Kneeland, who became Gildan’s board chairman in May, said good things lie ahead.

“Gildan’s new directors bring a wealth of expertise and fresh perspectives, and the board is excited about supporting the company in this next chapter, working closely with Glenn and the senior team and all stakeholders,” Kneeland said. “Together, we look forward to achieving great success.”

Based on estimated 2023 North American promotional product revenue of $739.3 million, Gildan ranked fourth on Counselor’s most recent list of the largest suppliers in the industry.