Gildan Raises Earnings Guidance and Sells HanesBrands Australia
The apparel manufacturer expects adjusted diluted earnings per share to rise 32.5% to 35% year over year.
Gildan Activewear Inc. (GIL), the vertically integrated apparel manufacturer, reported second quarter net sales from continuing operations of $1.58 billion, an increase of 72.3% over the prior year. The company attributed the growth to the HanesBrands acquisition, though the result was partially offset by integration initiatives to optimize its manufacturing footprint.
Compared with proforma net sales of $1.72 billion, the company saw a decline due to lower volumes resulting from proactive inventory reduction across customers. For the quarter, the company reported an operating margin of 11.1% and an adjusted operating margin of 22.3%. GAAP diluted earnings per share from continuing operations were $0.49, while adjusted diluted EPS from continuing operations reached $1.28.
Gildan is currently integrating HanesBrands and expects to realize approximately $100 million in synergies in 2026. The company maintains a target of approximately $250 million in annual run-rate cost synergies over the next three years.
The company announced the sale of HanesBrands Australia for an enterprise valuation of approximately 700 million Australian dollars, or approximately $490 million. The transaction is expected to close in the second half of 2026. Gildan said it will use the proceeds to pay down outstanding debt to accelerate a return to its target leverage framework of 1.5x to 2.5x net debt to proforma adjusted EBITDA ratio.
Financial results were influenced by U.S. Customs and Border Protection refund processes. Gildan expects to receive $220 million in IEEPA tariff refunds in 2026, with most anticipated in the third quarter. A recurring portion of these refunds stems from changes to U.S. tariff policy where tariffs ceased to apply on apparel originating under CAFTA-DR. The company said it will reinvest the non-recurring portion of these refunds into strategic growth initiatives, including retail marketing, brand building, and product innovation.
Gildan updated its full year 2026 guidance, projecting revenue at the low end of its previous $6.0 billion to $6.2 billion range. The company expects an adjusted operating margin of approximately 21.8% and free cash flow of approximately $1.0 billion. Adjusted diluted EPS is projected to be between $4.65 and $4.75.
The company maintained its three-year objectives for the 2026–2028 period. Management stated the updated 2026 outlook reflects the underlying earnings power of the combined business as it exits the year.