Gildan Activewear Inc. is lowering its full-year 2026 financial outlook after weaker-than-expected apparel demand weighed on third-quarter sales, prompting the Montreal-based company to withdraw its previously announced 2026-2028 financial objectives.
The company reported net sales of US$1.47 billion for the quarter ended Sept. 27, up 61.1 per cent from a year earlier, largely reflecting its acquisition of HanesBrands. However, sales fell short of its previous guidance of approximately US$1.65 billion as demand softened across wholesale and retail operations.
Gildan now expects 2026 revenue of US$5.4 billion to US$5.5 billion, down from its previous forecast of US$6 billion to US$6.2 billion. Adjusted diluted earnings per share are projected at US$3.70 to US$3.80, compared with the earlier range of US$4.65 to US$4.75.
Weaker demand affects sales outlook
Glenn J. Chamandy, Gildan’s President and CEO, said the company faced a more subdued demand environment and near-term challenges in both wholesale and retail.
“Our results this quarter did not meet our expectations, reflecting a more subdued demand environment and nearterm challenges in parts of our business across both Wholesale and Retail. The demand recovery we had anticipated has not materialized as expected, but our confidence in the underlying strength of the business and the long-term growth opportunity has not changed. We continued to make meaningful progress on the integration of HanesBrands and advance our synergy initiatives. In the current environment, our priorities remain clear: stay focused on what we can control, including leveraging the scale of our brands, our manufacturing network and our commercial capabilities, strengthen the foundations of our combined platform and continue to invest strategically in innovation and growth,” said Chamandy.
Wholesale sales totalled US$735 million, down 6.8 per cent from the previous year. Retail sales reached US$732 million, compared with US$122 million a year earlier, primarily reflecting the HanesBrands acquisition. However, retail sales were down 7 per cent against pro forma results from the previous year.
Gildan attributed the shortfall to weaker consumer demand, lower customer replenishment, product availability and service constraints, and lower selling prices.
Third-quarter operating income was US$354 million, compared with US$192 million a year earlier. Adjusted diluted earnings per share rose 54 per cent to US$1.54.
HanesBrands integration continues
Gildan said integration initiatives are progressing as planned, with most of the synergy-capture measures scheduled for 2026 already implemented. The company expects approximately US$100 million in synergies this year and continues to target US$250 million in annual run-rate cost savings by the end of 2028.
The company also completed the sale of HanesBrands Australia on Oct. 26 for an enterprise value of approximately A$700 million, or about US$490 million. Proceeds were used to repay outstanding debt.
Despite the revised outlook, Gildan generated US$633 million in cash from operating activities and US$606 million in free cash flow during the third quarter.
“Gildan continues to generate strong free cash flow and remains committed to disciplined capital allocation, including returning capital in a way that maximizes long-term value for shareholders,” Chamandy said.
Share buyback and revised targets
The company also announced a renewed normal course issuer bid allowing it to repurchase up to 9.26 million common shares, representing approximately 5 per cent of its outstanding shares. The program is scheduled to begin Nov. 9, 2026, and continue until Nov. 8, 2027.
Gildan withdrew its previously communicated 2026-2028 financial objectives, citing rapidly changing macroeconomic conditions, rising interest rates and persistent inflation affecting consumer demand for apparel.
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