Gildan Navigating Through Industry Challenges as Printwear Demand Holds; Shares Fairly Valued

As work, travel, and leisure activities normalize, Gildan’s high exposure to the North America imprintables market allowed it to meet our third-quarter expectations amid a difficult marketplace. Specifically, its activewear (87% of total) revenue jumped 13% in the quarter, above our 7% forecast. In contrast, its hosiery and underwear sales (13% of total) plummeted 26% as demand for basics at retail is unusually weak as consumers hold off on purchasing, inventories are too high, and retailers like wide-moat Walmart, Gildan’s primary private-label customer, are keeping stocks at low levels. Nonetheless, given the seemingly stable printwear demand, we do not expect to make any material revisions to our fair value estimates of $31/CAD 40. However, we would await more attractive entry points before accumulating shares.