Gildan Activewear, Inc. reported earnings per share on an adjusted basis grew 17.6 percent as margins benefited from lower manufacturing costs, complemented by price increases to offset U.S. tariffs. Sales increased 2.2 percent, led by a 5.4 percent gain in activewear.

“We were pleased with this quarter’s results as we continue to drive profitable growth, supported by strong net sales growth of 5.4 percent in Activewear, which allowed us to deliver record adjusted diluted EPS. Our record-setting third-quarter results once again showcase the effectiveness of the Gildan Sustainable Growth (GSG) strategy to drive strong financial performance, and we’re excited about the next phase of its growth journey. Our keen focus on execution, combined with Gildan’s low-cost vertically integrated business model, will be further enhanced by the added capabilities and reach introduced through the HanesBrands acquisition, which is expected to close later this year or early in 2026,” said Glenn J. Chamandy, Gildan’s president and CEO.

Q3 2025 Operating Results
Net sales were $911 million, up 2.2 percent over the prior year, in line with previously provided guidance for the quarter of low single-digit growth. Activewear sales of $831 million were up 5.4 percent, driven by a favorable product mix and higher net prices. Solid sales to North American distributors were complemented by sustained momentum with National account customers, driven by its strong overall competitive positioning. Gildan continued to see robust demand for Comfort Colors and benefited from strong response to its new soft cotton technology and new brands such as Champion and ALLPRO. Separately, hosiery and underwear sales were $80 million, down 22.1 percent versus the prior year. The year-over-year drop in sales was mainly owing to lower sales volumes, reflecting, as expected, a timing shift of shipments into the fourth quarter, and, to a lesser extent, unfavorable mix, as the category experienced continued broader market weakness during the quarter. Finally, international sales were $60 million, down from $64 million last year, a 6.1 percent year-over-year decrease, primarily due to ongoing demand softness across markets.

The company generated gross profit of $307 million, or 33.7 percent of net sales, versus $278 million, or 31.2 percent of net sales, in the same period last year representing a 250-basis point improvement, which was mainly a result of lower manufacturing costs, complemented by favorable pricing reflecting price increases implemented to offset the initial impact from tariffs, and to a lesser extent, the benefit from lower raw materials costs.

SG&A expenses were $95 million compared to $84 million in the prior year. Adjusting for charges related to the proxy contest and leadership changes and related matters, which were almost entirely incurred in the prior year, adjusted SG&A expenses remained at $95 million, or 10.4 percent of net sales, compared to $78 million, or 8.8 percent of net sales, for the same period last year. The increase in adjusted SG&A in the quarter reflects higher variable compensation and IT-related general and administrative expenses.

The company generated operating income of $192 million, or 21.1 percent of net sales, compared to $193 million, or 21.7 percent of net sales, generated in the prior year. Adjusting for restructuring and acquisition-related costs primarily related to the HanesBrands proposed acquisition, and the aforementioned costs relating to proxy contest and leadership changes and related matters which were almost entirely incurred in the prior year, adjusted operating income was $212 million up $12 million, or 23.2 percent of net sales, up 80 basis points versus last year and slightly ahead of guidance provided.

Net financial expenses of $44 million were up $13 million from the prior year, primarily due to fees related to the committed financing obtained for the proposed HanesBrands acquisition and generally higher borrowing levels. Furthermore, in connection with this acquisition, Gildan announced in the third quarter a private placement offering of US$1.2 billion in aggregate principal amount of senior unsecured notes across two series. The proceeds from the offering will be used to fund the proposed acquisition of HanesBrands, refinance its debt, and cover related transaction costs.

Taking into account the factors above, partly offset by the benefit from a lower outstanding share base, GAAP diluted EPS were $0.80, versus $0.82 in the prior year and, adjusting for restructuring, acquisition-related and other costs as well as the aforementioned financing fees in connection with the proposed HanesBrands acquisition, adjusted diluted EPS were $1.00, up 17.6 percent from $0.85 in the prior year.

Year-to-Date Operating Results
Net sales for the first nine months of the year ended September 28, 2025, were $2,54 million, up 3.7 percent versus the same period last year. Excluding the impact of Under Armour’s exit in 2024, consolidated sales would have been up mid-single digits. In Activewear, Gildan generated sales of $2,300 million, up $183 million or 8.7 percent, driven primarily by favorable product mix and higher volumes, reflecting strong sales at U.S. Distributors and National accounts. In the hosiery and underwear category, sales were down 27.5 percent versus the prior year, reflecting lower volume, less favorable mix, broad market weakness and the exit of Under Armour’s business. International sales of $172 million were down 8.1 percent year over year, reflecting continued soft demand across geographies.

The company generated gross profit of $818 million, up $67 million from the prior year, driven by higher sales and gross margin. Gross margin of 32.2 percent was up by 150 basis points year over year, mainly driven by lower raw material costs, favorable pricing, and lower manufacturing costs, partially offset by the initial flow-through of tariffs.

SG&A expenses were $264 million, down $48 million year over year. 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 $262 million, or 10.3 percent of net sales, compared to $230 million or 9.4 percent of net sales, reflecting higher variable compensation and general and administrative expenses.

The company generated operating income of $521 million, or 20.5 percent of net sales, reflecting higher net sales and improved gross margins, compared to operating income of $439 million, or 17.9 percent of net sales, last year. Excluding restructuring and acquisition-related costs and the costs relating to proxy contest and leadership changes and related matters, adjusted operating income was $556 million or 21.9 percent of net sales, up $35 million or 60 basis points compared to the prior year.

Net financial expenses of $106 million were up $28 million over the prior year, primarily due to higher borrowing levels and fees related to the committed financing obtained for the proposed HanesBrands acquisition. Reflecting the improved financial performance and the benefit from a lower outstanding share base, GAAP diluted EPS and adjusted diluted EPS were $2.27 and $2.55, respectively, compared to GAAP diluted EPS and adjusted diluted EPS of $1.62 and $2.18, respectively, in the prior year.

Cash flows from operating activities totaled $270 million for the nine months ended September 28, 2025 (Q3 – $224 million), compared to $291 million in the prior year, primarily reflecting higher working capital investments. After accounting for capital expenditures totaling $82 million, the company generated approximately $189 million in free cash flow (Q3: $200 million). During the first nine months of 2025, the company continued to execute on its capital allocation priorities, returning $286 million to shareholders (Q3 $79 million), including dividends and by repurchasing about 3.8 million shares under its normal cash issuer bid (NCIB) program. Gildan ended the third quarter with net debt of $1,74 million and a leverage ratio of 2.0 times net debt to trailing twelve months adjusted EBITDA, at the midpoint of its current targeted debt range of 1.5x to 2.5x net debt to adjusted EBITDA.

Merger Agreement with HanesBrands
On August 13, 2025, the company announced that it had entered into a definitive merger agreement to acquire HanesBrands. Under the terms of the merger agreement, HanesBrands shareholders will receive 0.102 common shares of Gildan and $0.80 in cash for each share of HanesBrands common stock, representing a total equity value of approximately $2.2 billion and an enterprise value of approximately $4.4 billion, based on the closing price of Gildan’s common shares on August 11, 2025. The transaction, unanimously approved by the Boards of Directors of both companies, is expected to close in late 2025 or early 2026, subject to HanesBrands shareholder approval and the satisfaction or waiver of other customary closing conditions. As such, the company’s full-year outlook for 2025 does not account the planned combination with HanesBrands.

2025 Outlook
Gildan said, “Delivering another strong quarter despite the fluid macroeconomic environment and a generally softer demand environment is a testament of our continued commitment to execute our Gildan Sustainable Growth (GSG) strategy and underscores our confidence in our ability to achieve our objectives, as we continue to drive growth in key product categories and channels. We believe that our vertically integrated business model, paired with our strong industry positioning, should support continued strong financial performance.”

Consequently, for 2025, Gildan is updating its full-year guidance as follows:

  • Revenue growth for the full year to be up mid-single-digits, in line with previous guidance.
  • Full year adjusted operating margin to be up approximately 70 basis points compared to the previous guidance of up approximately 50 basis points.
  • Capex to come in at approximately 4 percent of sales, down from previous guidance of 5 percent.
  • Adjusted diluted EPS in the range of $3.45 to $3.51, up between approximately 15 percent and 17 percent year-over-year, compared to its previous guidance of $3.40 to $3.56.
  • Free cash flow to be approximately $400 million, compared to the previous guidance of above $450 million.

Image courtesy Gildan