Gildan Activewear ((TSE:GIL)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Gildan Activewear’s Q3 2025 earnings call revealed a generally positive sentiment, underscored by strong financial performance. The company reported record earnings per share (EPS), robust Activewear sales, and significant improvements in gross margin. Despite these achievements, challenges were noted in declining hosiery and international sales, alongside increased selling, general, and administrative (SG&A) and financial expenses. The company’s strategic focus on innovation and the proposed acquisition of HanesBrands were highlighted as promising drivers for future growth.
Record Adjusted Diluted EPS
Gildan Activewear reported a record adjusted diluted EPS of $1 for Q3 2025, representing a 17.6% increase from the same period last year. This milestone underscores the company’s strong financial performance and effective cost management strategies.
Strong Activewear Sales Growth
Activewear sales saw a 5.4% increase, driven by a favorable product mix and higher net prices. This growth reflects the company’s successful market positioning and ability to meet consumer demand.
Gross Margin Improvement
The company achieved a gross margin of 33.7%, marking a 250 basis point improvement year-over-year. This improvement highlights Gildan’s efficient production processes and cost control measures.
Strategic Expansion and Innovation
Gildan’s introduction of new brands such as ALLPRO and Champion, along with the expansion of the Comfort Colors brand, is driving growth. These strategic initiatives demonstrate the company’s commitment to innovation and market expansion.
Proposed HanesBrands Acquisition
The proposed acquisition of HanesBrands is expected to generate synergies of at least $200 million by leveraging Gildan’s manufacturing network. This acquisition is a strategic move to enhance Gildan’s market position and operational efficiency.
Decline in Hosiery and Underwear Sales
Sales in the hosiery and underwear category declined by 22% compared to last year, attributed to a timing shift of shipments and broader market weakness. This decline highlights the challenges faced in these segments.
International Sales Decline
International sales decreased by $4 million or 6.1% year-over-year, reflecting ongoing demand softness. This decline indicates challenges in maintaining international market momentum.
Higher SG&A Expenses
SG&A expenses increased to $95 million from $84 million last year, driven by higher variable compensation and IT-related expenses. This rise in expenses reflects the company’s investment in operational capabilities.
Increased Net Financial Expenses
Net financial expenses rose by $13 million due to fees related to the HanesBrands acquisition and higher borrowing levels. This increase highlights the financial implications of strategic investments.
Forward-Looking Guidance
For the full fiscal year, Gildan has narrowed its adjusted diluted EPS guidance to a range of $3.45 to $3.51, with an anticipated full-year adjusted operating margin increase of approximately 70 basis points. Capital expenditures are expected to be around 4% of sales, with free cash flow projections revised to approximately $400 million. The company remains focused on operational agility and sustainable growth, with plans to integrate the proposed acquisition of HanesBrands, aiming for substantial synergies.
In summary, Gildan Activewear’s Q3 2025 earnings call conveyed a positive outlook, driven by record financial results and strategic initiatives. While challenges persist in certain segments, the company’s focus on innovation and strategic acquisitions positions it well for future growth. Investors and market watchers will be keen to see how these strategies unfold in the coming quarters.