deaddog wrote:scomac wrote:deaddog wrote:What do you like about the balance sheet?
A quick look shows GIL has the same red flags as CTUa.
Red Flag is the increase in inventory. Most of it finished product. They are either planning for a stellar upcoming season or, more than likely, have a bunch of stuff that didn’t move last year. Not a good thing in the fashion industry.
From Gildan Activewear Reports Record Results for Third Fiscal Quarter and Updates Full Year Fiscal 2011 Guidance
Gildan wrote:The Company plans to continue to run all of its manufacturing facilities at full production capacity during the fourth quarter, in spite of the uncertain economic environment, in order to rebuild inventories to optimal levels and to position the Company to take advantage of any improvement in market conditions and pursue its growth initiatives in fiscal 2012.
I'm not sure that I'd put Gildan in "the fashion industry". They make T-shirts, fleece, sports shirts and socks. Meat and pototoes stuff that doesn't go "out of fashion", as they are never "in fashion" IMHO.
deaddog does make a good point that it is probably worthwhile to watch the inventory numbers over the next few quarters to ensure that they don't build out too much inventory, particularly given the uncertain economic environment.