Gildan reported first quarter net earnings of $16.2 million and diluted E.P.S. of 27 cents, up 92.9% from net earnings of $8.4 million, or 14 cents per share, in the first quarter of fiscal 2005. E.P.S. was in excess of the company's guidance of at least 23 cents per share, which it had provided on December 1, 2005, and was a record for the first quarter of a fiscal year.

Compared to the first quarter a year ago, the increase in net earnings and E.P.S. was due to continuing strong growth in unit sales volumes and higher gross margins, partially offset by higher selling, general and administrative and depreciation expenses.

Sales in the first quarter, which is seasonally the lowest quarter in the fiscal year for the T-shirt business, amounted to $120.3 million, up 10.4% from $109.0 million in the first quarter of last year. The increase in sales revenues primarily reflected a 14.8% increase in unit sales volumes, partially offset by the impact of a lower-valued product-mix. Net selling prices were marginally higher than last year.

The increased unit sales reflected continuing market share penetration in all product categories, based on the S.T.A.R.S. report. The value of the S.T.A.R.S. report continues to be reduced by the non-participation of the company's largest distributor. The table below summarizes the S.T.A.R.S. data for the calendar quarter ended December 31, 2005.

                                                 Gildan      Industry
      Gildan        Gildan                  Unit Growth   Unit Growth
Market Share  Market Share                  Q1 2006 vs.   Q1 2006 vs.
     Q1 2006       Q1 2005                      Q1 2005       Q1 2005
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       41.7%         30.2%       T-shirts         34.2%          2.8%

       33.9%         24.6%   Sport shirts         28.7%        (0.4)%

       27.7%         18.6%         Fleece         33.0%          0.5%

Gross margins in the first quarter were 35.7%, versus 29.7% in the first quarter of 2005. The significant increase in gross margins was due to more favourable manufacturing efficiencies and the lower cost of cotton, as well as slightly higher selling prices. These factors were partially offset by the impact of product-mix and increased energy and transportation costs.

Selling, general and administrative expenses in the first quarter were $18.1 million, or 15.0% of sales, compared to $16.3 million, or 15.0% of sales, in the first quarter of last year. The increase in selling, general and administrative expenses was due to higher volume-related distribution expenses, a severance charge, the impact of the stronger Canadian dollar, and the continuing development of the organization to support the company's ongoing growth strategy. The increase of $1.5 million in depreciation expense was due to the company's major ongoing investments in capacity expansion, in particular the new Dominican Republic facility.

Earnings Guidance

Due to the more favourable than anticipated results for the first fiscal quarter, the company has increased its E.P.S. guidance for the full 2006 fiscal year to approximately $1.90 per share, compared with its prior guidance of approximately $1.85 per share. The revised full year guidance reflects a projected increase of 22.6% in E.P.S. compared with $1.55 per share in fiscal 2005, before taking account of the 12 cents per share special charge last year for the closure and relocation of the company's Canadian yarn-spinning facilities.

The company's current full year guidance continues to assume a 1.5% decrease in average selling prices for the balance of the fiscal year, compared to both the first quarter of fiscal 2006 and compared to last year, as well as sequentially higher cotton costs for the balance of fiscal 2006. Although selling prices in the first quarter were higher than anticipated, there has been promotional activity in the month of January and the company does not yet have sufficient visibility to project whether market conditions will support the continuation of more favourable pricing. Based on the assumption of lower selling prices, Gildan expects that diluted E.P.S. in the second quarter of fiscal 2006 will be approximately 45 cents per share, or approximately 20% higher than the second quarter a year ago, prior to the yarn-spinning charge.

Cash Flow

During the first quarter, the company generated $19.6 million of free cash flow, after utilizing $44.0 million to finance its seasonal build-up of inventories for the peak selling season, and financing capital expenditures of $12.4 million. (Free cash flow is defined as cash flow from operating activities less cash flow from investing activities.) Capital expenditures are now expected to total approximately $90 million for the full fiscal year, compared to the company's previous estimate of approximately $105 million. The reduction in capital expenditures reflects the elimination of certain non-expansion capital spending projects, together with the later timing of some equipment purchases for the new Rio Nance activewear facility currently under construction. The company continues to be pleased with the progress of its major capacity expansion projects in the Dominican Republic and Honduras. In addition, Gildan is continuing to evaluate potential acquisition opportunities in the sock industry.

Disclosure of Outstanding Share Data

As of January 31, 2006 there were 60,038,324 common shares issued and outstanding along with 487,015 stock options and 343,500 restricted share units outstanding. Each stock option and restricted share unit entitles the holder to either purchase or receive one common share at the end of the vesting period.

                        Gildan Activewear Inc.
               Consolidated Statements of Earnings
     (In thousands of U.S. dollars, except per share data)

                                          Three months ended
                                January 1, 2006      January 2, 2005
                              -----------------     ----------------

                                     (unaudited)          (unaudited)

Sales                                  $120,310             $108,957
Cost of sales                            77,415               76,577
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Gross profit                             42,895               32,380

Selling, general and
 administrative expenses                 18,063               16,327
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                                         24,832               16,053

Depreciation and amortization             7,430                5,880
Interest expense, net                       566                1,201
Non-controlling interest in loss
 of consolidated joint venture             (108)                   -
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Earnings before income taxes             16,944                8,972

Income tax expense                          749                  585
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Net earnings                            $16,195               $8,387
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Basic EPS                                 $0.27                $0.14

Diluted EPS                               $0.27                $0.14

Weighted average number of
 shares outstanding (in thousands)
  Basic                                  59,970               59,407
  Diluted                                60,559               59,770