Gildan Activewear Inc., as part of its overall plan to integrate its recent acquisition of Kentucky Derby Hosiery, is investing approximately $7 million in a state-of-the-art 400,000 square feet retail distribution centre in a leased building in Martinsville, Va. The new facility is located approximately 15 miles from Gildan’s distribution centre in Eden, N.C.

The installation of equipment in this facility, together with associated warehouse management information systems, is expected to be completed by the end of the second quarter of Gildan’s 2007 fiscal year. Gildan plans to close Kentucky Derby Hosiery’s existing distribution centres at multiple sites in Danville, Va. and Mt. Airy, N.C. during the first half of fiscal 2007, and offer employment at the new facility to all of Kentucky Derby Hosiery’s existing employees currently based at these locations.

The relocation and consolidation of the retail distribution centres will result in improved operating efficiencies and lower transportation costs, as well as faster customer response times. In addition, it will provide additional capacity for future growth in retail sales as Gildan implements its strategy to position itself as a full product-line supplier of athletic socks, underwear and activewear for the mass-market retail channel. The cost reduction benefits from this new initiative were taken into account in the EPS accretion of approximately U.S. $0.30 per share previously projected by Gildan from the overall acquisition of Kentucky Derby Hosiery, once the integration process has been completed. Restructuring costs due to the rationalization of the distribution centres are expected to be negligible.

As a result of the investment in the Martinsville facility to support the acceleration of Gildan’s retail plans, the Eden distribution centre will be fully dedicated to providing the capacity required for Gildan’s anticipated further growth in the wholesale distribution channel.