Gildan says proxy battle cost US$57-million in quarter

A leadership struggle at Gildan Activewear Inc. GIL-T cost it US$57.2 million in the second quarter, denting its bottom line, the company reported Thursday.

The costs, along with higher income taxes, helped push down earnings to US$58.4 million for the quarter from US$155.3 million for the same quarter last year.

The Montreal-based company, which reports in U.S. dollars, saw a protracted power struggle that originally saw chief executive Glenn Chamandy ousted last December only to later retake the helm at the end of May.

“I am excited to be back leading the company,” said Chamandy in an earnings press release Thursday.

“This is a period of significant opportunity in our industry, and we believe that Gildan’s competitive position has never been stronger.”

Reported costs related to the proxy fight included US$18 million for advisory fees, US$21.6 million for severance costs and US$7.8 million for expenses related to Chamandy’s firing and subsequent reinstatement.

The company also saw higher expenses from income tax, after the enactment of the global minimum tax in Canada and Barbados. It says the impact, retroactive to the start of the year, pushed its adjusted effective income tax rate to 27.2 per cent for the quarter, up from 4.8 per cent last year.

The increase left income tax expenses at US$58.5 million for the quarter, up from US$6.7 million last year.

Gildan says its adjusted net income worked out to US$124.7 million, up from US$112.3 million last year.

The company says net sales for the quarter came in at US$862.2 million, up from US$840.4 million last year.