Who is Gildan Activewear Inc.?
Gildan Activewear is a vertically integrated manufacturer of basic apparel — activewear (blank T-shirts and fleece), hosiery, underwear, and intimates — sold largely through wholesale distributors in the printwear channel. Co-founded and led by CEO Glenn Chamandy, who was reinstated in 2024 after a proxy fight, the company competes on low-cost, large-scale production. In December 2025 it closed its acquisition of Hanesbrands, roughly doubling its consumer and innerwear exposure and lifting leverage to about 3.3x.
Business Model
Per the report, Gildan makes money by manufacturing finished apparel at low cost through a large vertically integrated supply chain and selling it primarily to wholesale distributors, recognizing revenue when goods ship from its facilities. The business is highly concentrated: close to half of sales flow through three distributors, and its single largest — S&S, which acquired alphabroder in 2024 — accounted for roughly a third of net sales in 2025. Revenue is also smoothed using tools common to the channel, including volume rebates, price discounts, rights of return, and extended payment terms. The 2025 Hanesbrands acquisition added a consumer innerwear portfolio sold more heavily through mass retailers.
Jehoshaphat Research's Key Allegations
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Jehoshaphat alleges Gildan has spent years inflating revenue by "stuffing" its distributor channel — pushing excess product at quarter-ends using extended payment terms, rebates, and incentives to pull sales forward. The firm estimates roughly $510 million of unnecessary product sat in the channel at Q1 2026, and that "true" organic growth has run near -3% over three years versus the roughly +1% Gildan reported.
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The firm argues the problem is obscured by financial engineering: Gildan transferred about $777 million — close to 40-45% — of receivables off its balance sheet through receivables purchase agreements. Adding those back, Jehoshaphat calculates a "true" days-sales-outstanding of about 129 days in Q1 2026, versus a 2000-2022 average of 57 days, and roughly 195 days at its largest distributor.
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Multiple sources describe a "locker program" in which Gildan ships product to customers who don't pay until they resell it — an arrangement they liken to consignment. Because Gildan discloses no consignment inventory yet recognizes revenue upon shipment, Jehoshaphat questions whether such shipments are booked as sales lacking economic substance, drawing a comparison to the Sunbeam case.
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Jehoshaphat contends 2026 guidance is implausible. Street estimates imply about +9% pro forma revenue growth in the second half, and management guides to over $850 million of free cash flow — which the firm says would require FCF to nearly double and reverse a three-year decline. It pegs the 2H26 revenue "expectations gap" at roughly $0.8 billion, about 23% of projected second-half sales, if the channel unwinds.
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On governance, the report flags that CEO Glenn Chamandy faces a Revenu Quebec case alleging "misrepresentation" or "fraud" (with $48 million demanded), and that co-founder Greg Chamandy has adverse court findings. It also notes about $1.2 million a year paid to the CEO's companies under a structured "aircraft agreement," the CEO's large 2023 share sales below $30, and the resignation of the three seniormost Ethics and Fraud Compliance Committee members after the 2024 board overhaul.
Key Charts
Jehoshaphat's "true" DSO adds back the receivables Gildan sold off-balance-sheet (about $667m at Q1 2026, roughly 40% of total). The firm says the metric peaked near 145–148 days in Q4 2025 before easing to 129 — a sequential drop it reads as the start of a channel "unwind."
Days sales outstanding at Gildan's single largest distributor more than doubled across three years, on the firm's math. About 67% of Gildan's trade receivables were owed by this distributor at the end of 2025 — a concentration Jehoshaphat ties to its channel-stuffing thesis.
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