BUSINESS

Gildan Activewear introduces brand with Super Bowl ad ahead of Q1 results

02/04/2013 05:18 EST | Updated 04/06/2013 05:12 EDT
MONTREAL - Gildan Activewear's edgy 30-second Super Bowl spot — featuring a young couple apparently on a one-night stand — is part of a $25-million plan to boost consumer awareness of the Montreal-based company.

The maker of T-shirts, underwear and socks is trying to make inroads into the competitive apparel business by selling its own Gildan-branded products, in addition to no-name products it makes for discount retailers such as Walmart and T-shirts sold to screenprinters.

The Super Bowl ad — and a shorter version previewed on social media last week — shows a man waking up with a handcuff on his wrist. He's about to quietly leave the bedroom but returns to the sleeping woman, who is wearing his T-shirt.

The television spot ends with the guy trying to gently retrieve the shirt without waking the young woman and declares: "It's about time you had a favorite T-shirt" followed by the slogan "Gildan. Every thread counts."

About 380,000 people have viewed the ad on YouTube at http://www.youtube.com/watch?v=32HiJHMRdqg

Gildan spokeswoman Genevieve Gosselin said the company spent about $4 million for one spot in the U.S. and two in Canada during the Super Bowl.

She said the company started airing TV ads last year during specific events, like the Gildan New Mexico Bowl, but Sunday's game was the official kick off of a campaign that will air mostly on U.S. cable channels, targeted at millennial audiences under 30 years of age.

"As we are building our brand in the retail channel, we want to start making a connection between the brand name and the shirts people already have and which might already be their favorite," she wrote in an email.

The company has hired New York-based agency DeVito/Verdi to oversee the print, TV and social media advertising for its Gildan and Gold Toe branded clothing.

Gildan (TSX:GIL), which competes with apparel giants such as Fruit of the Loom and Hanesbrands, is expected to record a dramatic boost in first-quarter sales and adjusted earnings on Wednesday.

Analysts expect the company will reverse last year's 38 cents per share adjusted loss to earn 30 cents per share. Sales are expected to be up 31 per cent, rising to US$396.7 million.

They expect the growth will be propelled by a 46 per cent increase in printwear sales and an 18 per cent lift in branded apparel.

Tal Woolley of RBC Capital Markets reduced his rating for Gildan to sector perform but maintained his $39 per share price target because its shares have appreciated 74 per cent over the past year.

With production plans in place and cotton costs likely fixed for the year, he said the amount of promotion prices for productions will determine if Gildan can meet or exceed its US$2.60 to US$2.70 per share earnings guidance for the year.

Still, he said the first quarter should be very strong for the company.

"We forecast significant gross margin increase to 27.5 per cent, driven by lower cotton costs and no inventory devaluation," he wrote in a report.

Anthony Zicha of Scotiabank expects a strong year for Gildan supported by "healthy market fundamentals." He has a one-year share target price of $43.

"While we do not expect any revision to company guidance in the near term, we believe the company should experience increased earnings momentum in the second quarter and the second half of fiscal 2013."

On the Toronto Stock Exchange, Gildan's shares closed down 10 cents to C$36.06 in Monday afternoon trading.