Company Reports

We assign Gildan a Morningstar Economic Moat Rating of narrow based on a cost advantage. We believe the company has built an efficient supply chain that differentiates it from competitors. Although it is challenging to achieve a cost-based edge in apparel, we believe Gildan's investments in its vertically integrated supply chain have allowed it to gain one in the production and distribution of T-shirts and fleece. Most of these items are sold in the US printwear market. This space has become a highly profitable one as Gildan has relentlessly lowered costs while gaining share.

Gildan's pro forma second-quarter sales fell 8% due to intentional inventory reduction and demand weakness late in the period. Due to Hanesbrands' impact, Gildan's adjusted gross margin rose 3 percentage points to 34.5% but its adjusted operating margin declined 40 basis points to 22.3%.

Short-seller Jehoshaphat Research issued a report that sent Gildan's shares down 19% on June 16. Its main allegation is that the firm is offering generous payment terms to distributors to inflate sales. Gildan responded by reiterating its guidance and the accuracy of its financial disclosures.

We assign Gildan a Morningstar Economic Moat Rating of narrow based on a cost advantage. We believe the company has built an efficient supply chain that differentiates it from competitors. Although it is challenging to achieve a cost-based edge in apparel, we believe Gildan's investments in its vertically integrated supply chain have allowed it to gain one in the production and distribution of T-shirts and fleece. Most of these items are sold into the US printwear market. This space has become a highly profitable one as Gildan has relentlessly lowered costs while gaining share.

Proforma for the Hanesbrands acquisition, Gildan's first-quarter sales fell 9% on planned inventory reductions and some demand weakness. Adjusted gross margin rose 180 basis points to 33%, but adjusted operating margin fell 470 basis points to 14.3% on Hanesbrands' higher operating expenses.

We assign Gildan a narrow moat rating based on a cost advantage. We believe the company has built an efficient supply chain that differentiates it from competitors. Although it is difficult to attain a cost-based edge in the apparel industry, we believe Gildan's investments in its vertically integrated supply chain have allowed it to gain one in the production and distribution of T-shirts and fleece for the North American printwear industry. The market has become a highly profitable one as Gildan has relentlessly lowered costs while gaining share.

Gildan's fourth-quarter sales rose 31% as it recognized revenue from Hanesbrands for the first time (deal closed Dec. 1). Adjusted operating margin fell 60 basis points to 20.7% on Hanesbrands' structurally lower margins. Adjusted EPS from continuing operations increased USD 0.13 to USD 0.96.

We assign Gildan a narrow moat rating based on a cost advantage. We believe the company has built an efficient supply chain that differentiates it from competitors. Although it is difficult to attain a cost-based edge in the apparel industry, we believe Gildan's investments in its vertically integrated supply chain have allowed it to gain one in the production and distribution of T-shirts and fleece for the North American printwear industry. The market has become a highly profitable one as Gildan has relentlessly lowered costs while gaining share.

Gildan's third-quarter sales grew 2% as a 5% increase in activewear sales offset continuing weakness in hosiery and underwear (down 22%). Its gross margin rose 250 basis points to 33.7% on manufacturing efficiencies and price hikes that exceeded incremental tariff costs.

Gildan's impending acquisition of Hanesbrands will essentially double the firm's annual sales base to USD 7 billion. Although the two firms' products and supply chains are similar, Gildan focuses on printwear shirts, while Hanesbrands focuses on branded basics sold at retail.

We assign Gildan a narrow moat rating based on a cost advantage. We believe the company has built an efficient supply chain that differentiates it from competitors. Although it is difficult to attain a cost-based edge in the apparel industry, we believe Gildan's investments in its vertically integrated supply chain have allowed it to gain one in the production and distribution of T-shirts and fleece for the North American printwear industry. The market has become a highly profitable one as Gildan has relentlessly lowered costs while gaining share.

Gildan has agreed to acquire Hanesbrands for USD 0.80 cash plus 0.102 Gildan shares per Hanesbrands share. Based on the closing price of Gildan's shares on Aug. 11, the deal values Hanesbrands at an enterprise value of USD 4.4 billion, or $6.00 per share.

Final negotiations are underway for the acquisition of Hanesbrands by Gildan, according to Financial Times. The proposed valuation is reportedly around $5 billion. Gildan's shares slid by a mid-single-digit percentage on Aug. 12 after the report.

We assign Gildan a narrow moat rating based on a cost advantage. We believe the company has built an efficient supply chain that differentiates it from competitors. Although it is difficult to attain a cost-based edge in the apparel industry, we believe Gildan's investments in its vertically integrated supply chain have allowed it to gain one in the production and distribution of T-shirts and fleece for the North American printwear industry. While this is a niche market in apparel, it has become a highly profitable one for Gildan as the firm has relentlessly lowered costs while gaining share.

Gildan's second-quarter sales rose 6.5% as 11.6% growth in activewear (89.5% of total) more than offset a 23.3% decline in the firm's struggling hosiery and underwear segment (10.5%). Adjusted gross and operating margins were strong at 31.5% (up 110 basis points) and 22.7% (flat), respectively.

We assign a narrow moat rating based on a cost advantage to Gildan. We believe it has built an efficient supply chain that differentiates it from competitors. Although it is difficult to attain a cost-based edge in the apparel industry, we believe that the firm’s investments in its vertically integrated supply chain have allowed it to gain one in the production and distribution of t-shirts and fleece for the North American printwear industry. While this is a niche market in apparel, it has become a highly profitable one for Gildan as the firm has relentlessly lowered costs while gaining market share.

Led by 9.3% sales growth in activewear (91% of total), Gildan reported a 2.3% first-quarter sales increase. Adjusted gross and operating margins each rose by about 1 percentage point to 31.2% and 19.0%, respectively.

The Trump administration announced tariffs on imports to the US that are materially higher than had been expected. This policy has significant implications for apparel manufacturers and retailers as, according to trade associations and other sources, approximately 98% of clothing and 99% of footwear that is sold in the US is imported, primarily from Asia. Indeed, according to the United States Fashion Industry Association, about 60% of US apparel is supplied by just three Asian countries: China, Vietnam, and Bangladesh. These three nations were hit extremely hard by the new policy, as tariff rates were set at 54% for China, 46% for Vietnam, and 37% for Bangladesh. High tariffs were imposed on most other key apparel-sourcing countries in Southeast Asia as well.

We assign a narrow moat rating based on a cost advantage to Gildan. We believe it has built an efficient supply chain that differentiates it from competitors. Although it is difficult to attain a cost-based edge in the apparel industry, we believe that the firm’s investments in its vertically integrated supply chain have allowed it to gain one in the production and distribution of t-shirts and fleece for the North American printwear industry. While this is a niche market in apparel, it has become a highly profitable one for Gildan as the firm has relentlessly lowered costs while gaining market share.

Gildan closed 2024 with solid results that were near our expectations, and its 2025 guidance aligns with our forecast, as well. Despite last year’s internal strife and uneven apparel demand, we believe Gildan is gaining share in its core printwear due to its production cost advantage, the source of our narrow-moat rating. We expect to lift our fair value estimates of $48/CAD 66.50 by mid-single-digit percentages but regard its shares, trading near all-time highs, as a bit pricey.