Gildan Activewear Ushers in a New Era with HanesBrands Boosting Q4 Top-Line

Gildan Activewear, Inc. reported results for the 2025 fourth quarter and full year ended December 28, 2025, including the acquired HanesBrands business from December 1, 2025 forward. The company is also pursuing a strategic review of the HanesBrands Australia business and numbers from that unit are now classified as as held for sale and reported as discontinued operations from the fourth quarter of 2025 forward.

“As we look ahead to 2026, we are very excited about the HanesBrands acquisition which doubles our scale, combines iconic brands with our world-class, low-cost, vertically integrated platform, and unlocks a powerful engine for innovation and growth,” offered Glenn Chamandy, president and CEO, Gildan Activewear Inc. “The integration is well underway and we now expect to deliver higher than initially targeted run-rate cost synergies reaching approximately $250 million by the end of 2028 with approximately $100 million in 2026.”

Fourth Quarter 2025 Results
(all currency expressed in U.S. dollars)

Net sales from continuing operations were reported at $1.08 billion in Q4, up 31.3 percent versus the prior-year Q4 period, including one month of contribution from HanesBrands. Excluding HanesBrands’ contribution of $217 million for the period from December 1, 2025 to December 28, 2025, net sales were reportedly up 4.9 percent year-over-year (y/y).

Activewear sales increased 10.3 percent to $788 million, reflecting the contribution of HanesBrands, favorable mix and higher net selling prices. Solid sales to North American distributors were said to be complemented by continued growth with national account customers, driven by a “strong overall competitive positioning, the contribution from new programs and market share gains in key growth categories.”

Gildan said it continued to see robust demand for Comfort Colors and the innovative pipeline continues to drive excitement, with new soft cotton technology and new brands such as Champion and AllPro.

Innerwear category net sale, which includes hosiery, underwear and intimates, were up 170.7 percent versus the prior-year period, driven by the contribution of HanesBrands, “partially offset by slightly lower volumes owing to continued broader market weakness.”

International sales increased by 5.1 percent y/y, said to be primarily driven by the contribution of HanesBrands, partially offset by continued demand softness across markets.

Effective the first quarter of 2026, Gildan will transition from disclosing net sales for Activewear and Innerwear (previously Hosiery and Underwear) to providing the same information on a “Retail” and “Wholesale” basis. The company said it believes these changes will improve transparency and better align the company’s reporting with its go-to-market structure.

Gildan said the shift in reporting reflects a reorganization of its internal sales teams to more closely align with its go-to-market strategy. The organizational realignment is intended to enhance strategic focus and operational execution by reflecting the distinct customer engagement models and growth drivers of each channel.

Net Sales by Major Product Group

Net Sales by Geographic Region

Profitability & Expense Summary
Gildan generated gross profit of $312 million, or 28.9 percent of net sales, versus $253 million, or 30.8 percent of net sales in the prior-year quarter. Adjusting for an inventory fair value step-up charge of $35.4 million recorded as part of the HanesBrands acquisition, Adjusted gross profit was $347 million, or 32.2 percent of net sales, compared to 30.8 percent in the prior-year quarter. The 140-basis point increase was said to be primarily driven by favorable pricing implemented to offset the impact from tariffs, lower manufacturing and raw material costs and, to a lesser extent, the favorable HanesBrands contribution.

SG&A expenses were reported at $125 million in Q4, compared to $78 million in the prior-year quarter, primarily reflecting the combination with HanesBrands. Adjusting for charges related to the proxy contest and leadership changes and related matters, Adjusted SG&A expenses were $124 million, or 11.5 percent of net sales, compared to $78 million, or 9.5 percent of net sales, for the 2024 Q4 period. The increase in Adjusted SG&A in the quarter reportedly reflects primarily the combination with HanesBrands as well as purchase accounting impacts, including amortization of intangible assets recorded in connection with the acquisition.

Operating income amounted to $99 million, or 9.2 percent of net sales, in the quarter, compared to $179 million, or 21.8 percent of net sales in the prior-year Q4 period. Adjusting for restructuring and acquisition-related costs as well as the inventory fair value step-up charge recorded as part of the HanesBrands acquisition, and costs related to the proxy contest and leadership changes and related matters, Adjusted operating income was $223 million, up $48 million y/y, or 20.7 percent of net sales compared to 21.3 percent in the prior-year period, mainly a reflection of the lower Adjusted operating margin at HanesBrands.

Net financial expenses were $43 million in Q4, up $16 million y/y primarily due to higher borrowing levels related to the HanesBrands acquisition.

GAAP diluted EPS from continuing operations were 32 cents per share versus 86 cents in the prior-year quarter, while Adjusted diluted EPS was 96 cents, up 16 percent from 83 cents per diluted share in the prior-year Q4 period.

Full Year 2025 Results
(all currency expressed in U.S. dollars)

Net sales from continuing operations were $3,619 million for the full fiscal year ended December 28, 2025, up 11 percent year-over-year. Excluding HanesBrands’ contribution of $217 million for the period from December 1, 2025 to December 28, 2025, net sales were $3,403 million, up 4 percent versus the prior year and in line with guidance. Excluding the impact of the exit of the Under Armour business in 2024, net sales would have been up approximately 4.7 percent year-over-year.

In Activewear, Gildan generated sales of $3,088 million, up $257 million or 9 percent, driven by a favorable mix, higher volumes and net selling prices and, to a lesser extent, the contribution of HanesBrands at year-end. Activewear sales also reportedly reflected market share gains in key growth categories, and a strong market response to products introduced throughout the year.

In the Innerwear category, sales were up 21 percent versus the prior year mainly reflecting the acquisition of HanesBrands, partly offset by lower volumes, less favorable mix, broad market weakness, and the exit of the Under Armour business.

International sales of $240 million were down 5 percent y/y, reflecting continued demand softness across geographies.

Gross profit amounted to $1,130 million in fiscal 2025, up $126 million versus the prior year, reportedly driven by the increase in sales and gross margin.

Gross margin of 31.2 percent, was up by 50 basis points y/y, mainly driven by lower manufacturing costs, favorable pricing, and lower raw material costs, partially offset by the flow through of tariffs. Adjusting for an inventory fair value step-up charge of $35.4 million recorded as part of the HanesBrands acquisition, Adjusted gross profit was $1,165 million, or 32.2 percent of net sales, representing a 150-basis point improvement compared to 30.7 percent in the prior year. Gildan said the remaining portion of the total inventory fair value step-up of $237 million which was recorded as part of the HanesBrands purchase price allocation will be recorded to cost of sales in fiscal 2026.

SG&A expenses were $389 million in fiscal 2025, $1 million below prior-year levels. Excluding costs related to the proxy contest and leadership changes and related matters which were almost entirely incurred in the prior year, adjusted SG&A expenses were $387 million, or 10.7 percent of net sales, compared to $308 million or 9.4 percent of net sales for the prior year, reflecting primarily the inclusion of HanesBrands as well as higher variable compensation expenses.

Operating income came in at $620 million, or 17.1 percent of net sales, in fiscal 2025, said to reflect higher net sales and improved gross margins compared to operating income of $618 million or 18.9 percent of net sales in 2024. Excluding restructuring and acquisition-related costs, the inventory fair value step-up charge recorded as part of the HanesBrands acquisition and the costs relating to proxy contest and leadership changes and related matters, Adjusted operating income was $779 million, up $83 million year-over-year. Adjusted operating margin was 21.5 percent of net sales in 2025, up 20 basis points compared to the prior year. Excluding HanesBrands, Adjusted operating margin was roughly in line with the guidance provided, which called for an increase of approximately 70 basis points year-over-year.

Net financial expenses were up $45 million y/y to $149 million in 2025, said to be primarily due to higher borrowing levels related to the acquisition of HanesBrands.

GAAP diluted EPS from continuing operations were $2.57 in 2025, compared to $2.46 in the prior year. Adjusted diluted EPS increased 17 percent y/y to $3.51 per share from $3.00 per share in the prior year. The increase in GAAP diluted EPS and adjusted diluted EPS (each from continuing operations) also reflects the benefit of a lower outstanding share (based on diluted weighted average number of common shares outstanding during the period). Excluding the HanesBrands contribution, Adjusted diluted EPS came in toward the low end of the guidance range provided.

Cash flows from operating activities totaled $606 million (Q4: $336 million), compared to $501 million in the prior year, primarily reflecting lower working capital investments. After accounting for capital expenditures totaling $114 million, the company generated approximately $493 million of free cash flow (Q4: $304 million). During 2025, the company continued to execute on its capital allocation priorities returning $319 million to shareholders (Q4: $33 million), including dividends paid and repurchasing about 3.8 million shares under our normal course issuer bid (NCIB) program.

Gildan ended the year with net debt of $4.42 billion and a leverage ratio of 3.0 times net debt to trailing twelve months proforma Adjusted EBITDA.

Full-Year 2026 Outlook
Looking ahead to 2026, Gildan said it expects to build on the progress made across key strategic initiatives under the Gildan Sustainable Growth (GSG) strategy, supporting continued market share gains in key product categories in a dynamic macroeconomic environment. The company said it remains confident in its ability to unlock the targeted run-rate synergies and achieve the three-year objectives for the 2026–2028 period outlined in August 2025, including: compound annual net sales growth of 3 percent to 5 percent versus pro forma net sales from continuing operations of $6.089 billion for the Gildan and HanesBrands combined businesses for fiscal 2025 and, adjusted diluted EPS growth in the low-20 percent range compared to our fiscal 2025 adjusted diluted EPS1 from continuing operations.

Gildan expect the following for 2026 for its continuing operations:

• Revenue of $6.0 billion to $6.2 billion;
• Full year adjusted operating margin1 of approximately 20 percent;
• Capex to come in at approximately 3 percent of net sales;
• Adjusted diluted EPS in the range of $4.20 to $4.40, an increase of approximately 20 percent to 25 percent year over year; and
• Free cash flow to be above $850 million.

First Quarter 2026 Outlook
For the first quarter of 2026, net sales from continuing operations are expected to be approximately $1.15 billion. Reflecting the company’s ongoing consolidation of manufacturing facilities and, in order to accelerate and increase synergy capture and support its new operating model, Gildan is proactively undertaking a temporary reduction of inventory levels across customer channels, which is expected to have an impact on net sales in the quarter.

Adjusted operating margin is expected to be approximately 12.9 percent of net sales, reflecting the higher SG&A levels which will be impacted by higher amortization of intangible assets and depreciation of property, plant and equipment resulting from the fair value purchase accounting impacts of the HanesBrands acquisition, in addition to a timing differential between some integration-related costs incurred and the flow-through of their benefit in subsequent quarters.

The company said its adjusted effective income tax rate in the first quarter of 2026 is expected to be slightly higher than the expected full year 2026 adjusted effective income tax rate.

Image courtesy Gildan Activewear, Inc.