Gildan Activewear Inc GIL

Gildan: New CEO Sets Ambitious Goals Amid an Unsettled Future; Shares Remain Expensive

On April 15, Gildan held a call to allow CEO Vince Tyra to lay out his priorities for the next few years. Tyra, on the job for three months, highlighted supply chain initiatives (including the development of the Bangladesh facility), international expansion, management depth, and investments in brands, products, and retail relationships. Tyra also discussed areas in which Gildan has fallen short, including by adding complexity through its past brand-building efforts and by failing to serve markets outside of North America efficiently. While Tyra provided some new insight into Gildan’s strengths and weaknesses, his priorities align closely with those of the Gildan Sustainable Growth plan that has been in place for two years. Indeed, the firm held to its medium-term financial targets, including mid-single-digit compound average annual sales growth and 18%-21% adjusted operating margins. As we rate Gildan as a no-moat firm without a competitive advantage, our estimates remain at the low end of these goals.