Signage is seen at Gildan Activewear Inc.'s annual meeting in Montreal, in 2024.Christinne Muschi/The Canadian Press
Canadian clothing maker Gildan Activewear Inc. GIL-N says it will capture more cost savings than previously expected from its recent takeover of Hanesbrands Inc. and will hive off its newly-acquired Australian business as it unveiled a bullish financial forecast for the coming year.
Gildan completed its US$2.2-billion purchase of U.S.-based Hanesbrands in December and integration is “well under way and progressing ahead of plan,” the Montreal company said in an earnings report Thursday. It now expects to generate annual run-rate cost synergies of about US$250-million over the next three years, up from an initial estimate of US$200-million.
The takeover combines two of the world’s biggest producers of basic apparel and doubles Gildan’s scale. Gildan is perhaps best known as a maker of blank, customizable T-shirts and fleece sweatshirts for wholesalers, while Hanesbrands, based in North Carolina, has built its name over a century in innerwear sold in stores.
Gildan chief executive Glenn Chamandy isn’t wasting time in making changes in a bid to build a better clothing manufacturer. He’s closing Hanesbrands’ two textile factories and shifting output into Gildan’s existing facilities, which are expanding.
Good luck finding those vintage clothes at thrift prices
And he’s hired Morgan Stanley & Co. to seek buyers for Hanesbrands’ Australian unit. Proceeds from the sale will be used to pay down debt, Gildan said. The business will generate net sales of about US$675-million and earnings per share of 21 US cents this year, according to information provided by the company.
The sale is part of a broader effort by Gildan to streamline Hanesbrands and invest in the products it thinks resonate best with shoppers. That includes underwear, Mr. Chamandy has said.
“The quicker that we can innovate and elevate the Hanes product category and their lines and offer better quality products to the consumer, the faster we’re going to go in a trajectory of sales growth,” Mr. Chamandy told analysts on a call Thursday. “We think the brand has a lot of legs.”
For its fourth quarter ended last Dec. 28, Gildan reported record net sales from continuing operations of US$1.08-billion, which includes a one-month contribution from Hanesbrands. Adjusted profit per share came in at 96 US cents, in line with analyst estimates, while net profit per share was 32 US cents.
The company hiked its dividend 10 per cent and introduced a new financial forecast for 2026. It expects revenues from continuing operations to be in the range of US$6-billion to US$6.2-billion and adjusted earnings per share to come in at between US$4.20 to US$4.40.
Video game-inspired clothes, Canadian debuts and more major moments at London Fashion Week
Pension fund giant Caisse de dépôt et placement du Québec recently bought back into Gildan stock and is now a top 10 shareholder after a four-year hiatus over disagreements over the company’s tax strategy. Gildan said Thursday it expects its adjusted effective income tax rate for this year to be around 19 per cent.
Gildan was plunged into turmoil by a nasty proxy fight for nearly half a year starting in late 2023 after former directors ousted Mr. Chamandy over what they said was his refusal to comply with a succession plan to which he had agreed. Directors later blasted him for his work ethic and lack of ideas.
But they then failed to convince investors there was a good reason to show him the door. A rebellion swelled up soon afterward, and he was reinstated. The episode cost the company an estimated US$76.8-million.