Record Q1 Sales
Reported record first-quarter net sales from continuing operations of $1.17 billion, up 63.8% year‑over‑year and in line with guidance (~$1.15 billion).
Gildan Activewear
· GIL
April 30th, 2026
Summary
- Earnings Call Date:
- 2026-04-30
- Change Since:
- -12.36%
- Next Earnings Date:
- 2026-07-30
Earnings Call Sentiment
NeutralThe call balanced strong commercial and integration momentum with short‑term financial and cash‑flow pressures. Positive operational items include record Q1 sales (+63.8% YoY), clear progress on Hanes integration, adjusted gross margin expansion on an adjusted basis, market share gains across key categories and maintained full‑year guidance (revenue $6.0–$6.2B; adj. operating margin ≈20%; adj. EPS guidance +20%–25% YoY). Offsetting these positives were lower adjusted EPS in the quarter (‑27.1% YoY), compressed adjusted operating margin in Q1, materially higher SG&A and purchase‑accounting impacts, negative operating/free cash flow in the quarter, and elevated leverage (3.3x). Management emphasized contingency planning for geopolitical risk and confidence in achieving synergy targets, but the near‑term profitability and cash‑flow impacts from the acquisition and inventory actions temper the outlook.
Company Guidance
Gildan maintained 2026 guidance of $6.0–$6.2 billion in revenue, adjusted operating margin of ~20%, CapEx of ~3% of net sales, adjusted diluted EPS of $4.20–$4.40 (up ~20–25% y/y) and free cash flow in excess of $850 million. For Q2 they expect net sales of ~$1.6 billion and an adjusted operating margin of ~19.7% (with the company saying adjusted gross margin/Q1 was 33% and adjusted SG&A/Q1 was 18.7%), reflecting a planned sequential margin improvement from Q1 (Q1 adjusted operating income $167 million and adjusted operating margin 14.3%; Q1 adjusted diluted EPS $0.43 versus GAAP diluted loss per share from continuing operations of $0.30). They finished Q1 with $1.17 billion in continuing‑operations sales (up 63.8% y/y), used $279 million in operating cash flow and ~$30 million of CapEx (consuming about $310 million of free cash flow), had net debt of $4.868 billion (3.3x leverage on trailing pro forma adj. EBITDA) and reiterated targets to achieve roughly $250 million of run‑rate synergies over three years (including ~$100 million in 2026), return leverage to a 1.5–2.5x range (target ~2x before resuming buybacks), and drive working capital below 30% by year‑end.
Retail Contribution from Hanes Acquisition
Retail net sales of $614 million versus $85 million in the prior year, primarily reflecting the Hanes Brands acquisition and higher net selling prices; HAA (Hanes Australia) classified as held for sale and excluded from continuing operations.
Integration Progress and Synergy Targets
Management is progressing Hanes integration (relocating production to Gildan facilities, standardizing IT, supply chain and manufacturing processes) and reiterates a run‑rate cost synergy objective of ~ $250 million over 3 years, including ~ $100 million in 2026, with pursuit of additional synergies beyond the 3‑year target.
Adjusted Gross Margin Improvement (adjusted for acquisition fair‑value step‑up)
Adjusted gross profit was $385 million or 33.0% of net sales (adjusting for a $106 million inventory fair‑value step‑up) versus 31.2% last year — an improvement of ~180 basis points on an adjusted basis.
Adjusted Operating Income Growth and Maintained 2026 Guidance
Adjusted operating income of $167 million, up $31 million year‑over‑year. Company maintained full‑year 2026 guidance: revenue $6.0–$6.2 billion, adjusted operating margin ≈20%, CapEx ≈3% of sales, adjusted diluted EPS $4.20–$4.40 (guidance implies +20% to +25% YoY) and free cash flow > $850 million.
Market Share Gains and Product Momentum
Management reports outperformance and market share gains: wholesale market down low single digits while Gildan grew low single digits; retail flattish while Gildan grew low single digits. Strong demand highlighted for Comfort Colors, Champion (licensed), underwear categories and new brands/programs.
Operator
Ladies and gentlemen, thank you for standing by, and welcome to Gildan Activewear's 2026 Q1 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jessy Hayem, Senior Vice President, Head of Investor Relations and Global Communications. Please go ahead.
Jessy Hayem
Thank you, Angela. Good morning, everyone, and thank you for joining us this morning. Earlier today, we issued a press release announcing our results for the first quarter while maintaining our guidance for 2026 as well as our 3-year objectives for the 2026-'28 period. The company's management discussion and analysis and consolidated financial statements are expected to be filed with the Canadian securities and regulatory authorities and the U.S. Securities and Exchange Commission today and will also be available on our corporate website. As a reminder, please note that we'll be holding our Annual General Meeting today at 02:00 p.m. Eastern Time with more information available on the Events page of our corporate website. Now joining me on the call today are Glenn Chamandy, President and CEO of Gildan, Luca Barile, Executive Vice President, Chief Financial Officer; and Chuck Ward, Executive Vice President, Chief Commercial Officer.
This morning, we'll take you through the results for the quarter and then a question-and-answer session will follow. Before we begin, please take note that certain statements included in this conference call may constitute forward-looking statements, which involve unknown and known risks, uncertainties and other factors...
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