Rising sales in Gildan’s (asi/56842) activewear division, which includes business with the promotional products industry, helped the Top 40 supplier increase total company revenue 3.3% year-over-year to nearly $2.17 billion for the first nine months of 2018, according to just-released financial data.

While Gildan’s earnings per diluted share also ticked up during the period, from $1.36 in 2017 to $1.37 in 2018, net earnings were down 5.3% to $291.2 million. The rise in earnings-per-share on lower net earnings occurred primarily because of a lower share count compared to last year.

Gildan CEO Glenn Chamandy.

According to Gildan, activewear sales for the first nine months of 2018 rose 11% -- an increase achieved, in part, due to volume growth in imprintable products in the U.S., strong shipments internationally, increased shipments to retailers and global lifestyle brands, and higher net selling prices.

During the third quarter ended September 30, a 12% year-over-year rise in activewear sales to $612.4 million helped drive an overall revenue increase of 5.3% to $754.4 million. The gain occurred despite Hurricane Florence disrupting Gildan’s distribution operations in the Carolinas – a disruption that impacted sales in the quarter by about $30 million, the company said.

For Q3 2018, Gildan recorded net earnings of $114.3 million, down from $116.1 million in last year’s comparable period. Q3’s diluted earnings per share of $0.55 represented a 5.8% increase over last year – a rise that again reflected a lower share count than in 2017.

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Despite the strong momentum in activewear, Gildan’s hosiery and underwear sales are in free fall, declining 16.6% in Q3 and 20.4% through the first nine months of 2018. Said Gildan: “The decline in the hosiery and underwear sales category was mainly due to lower unit sales of socks, particularly to mass retailers, which are shifting emphasis toward their own private label brands, lower licensed brand and Gold Toe sales, as well as the impact of the non-recurrence of the initial roll-out of certain program gains which occurred during the first half of the prior year.”

Looking ahead, Gildan predicts that hosiery and underwear sales will decrease by $125 million year-over-year for the whole of 2018. Even so, double-digit growth in activewear revenue is expected to drive overall net annual sales growth into the mid-single-digit range, the company said. Gildan now forecasts that adjusted diluted earnings per share will be between $1.85 and $1.87 compared to a previous anticipation of $1.85 to $1.90.

Meanwhile, adjusted annual EBITDA is projected to come in towards the lower end of Gildan’s previous guidance range of $605 to $620 million, and free cash flow for 2018 is projected to be between $400 and $425 million, versus previous guidance of in excess of $425 million. The lowered forecast is a result of higher-than-previously-anticipated year-end working capital requirements.

With estimated 2017 North American promotional product sales of $540 million, Gildan ranked fourth on Counselor’s latest list of the largest suppliers in the industry.