Gildan Activewear Inc (TSX:GIL)

Q2 2026 Gildan Activewear Inc Earnings Call Transcript

Jul 30, 2026 / 12:30 PM GMT

Release Date Price: C$73.37 (+2.14%)

Transcript

Key Points

Positve

Strong Q2 2026 results with net sales from continuing operations up 72% year-over-year to $1.58 billion, driven by the HanesBrands acquisition.
Adjusted diluted EPS from continuing operations increased 32% year-over-year to $1.28, exceeding expectations.
Integration of HanesBrands is progressing well, with the company on track to generate approximately $100 million in targeted synergies in 2026.
Expecting approximately $220 million in IEPA tariff refunds in 2026, with a structural benefit from tariffs no longer applying to apparel qualifying under CAFTA-DR.
Updated 2026 guidance raised significantly, with adjusted operating margin expected to be approximately 21.8% and adjusted diluted EPS in the range of $4.65 to $4.75.
Strong free cash flow generation, with 2026 guidance raised to approximately $1 billion, supported by a focus on working capital management.
Announced a definitive agreement to divest the HanesBrands Australia business (HAA) for approximately $490 million, expected to accelerate debt reduction and support the resumption of share repurchases.
Wholesale business performing well with continued market share gains, strong brand momentum (Comfort Colors, American Apparel, Champion), and improved market trends in June.
Proactive inventory reduction is now complete, setting the stage for a return to growth in both wholesale and retail in Q3 2026.
Planned reinvestment of a portion of tariff refunds into strategic growth initiatives to elevate the Hanes brand portfolio, including brand building, retail marketing, and product innovation.

Negative

Net sales from continuing operations declined compared to pro forma results from the prior year, due to lower volumes from proactive inventory reduction and the non-recurrence of pre-buying activity.
Retail environment remains soft, with cautious retailer inventory management and lower seasonal inventory builds at certain large customers due to softer consumer demand.
Adjusted operating margin decreased 40 basis points year-over-year to 22.3%, reflecting HanesBrands' historically higher SG&A levels and net headwinds from IEPA tariffs.
The broader operating environment remains dynamic and uncertain, with Q3 starting softer and trends harder to call due to geopolitical tensions and market cautiousness.
Net debt remains elevated at approximately $4.69 billion with a leverage ratio of 3.2x, though the HAA divestiture is expected to help reduce this.
The company faces ongoing tariff headwinds on products from its Asian hub (Bangladesh and Vietnam), which are subject to Section 301 tariffs of 10% and 12.5%, respectively.
Revenue guidance for 2026 was narrowed to the low end of the previously communicated range of $6.0 to $6.2 billion, reflecting a cautious market outlook.
SG&A expenses increased significantly due to the HanesBrands acquisition, including higher amortization and depreciation from purchase accounting, and planned reinvestments.
Working capital requirements have increased, with higher DSOs partly due to supporting customer demand and market share gains during a period of industry disruption.
The company faces ongoing inflationary pressures from higher raw material costs (cotton), energy, and labor, which could impact margins.

Refinitiv StreetEvents Event Transcript
E D I T E D V E R S I O N

GIL.TO - Gildan Activewear Inc
Q2 2026 Gildan Activewear Inc Earnings Call
Jul 30, 2026 / 12:30PM GMT

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Presentation
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Unidentified_1 [1]
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Ladies and gentlemen, thank you for standing by and welcome to Gildan Active Wear's 2026 Q2 earnings conference call.

Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Jessie Haim, senior Vice President, head of Investor Relations, and global communications.

Please go ahead.

Good morning, everyone, and thank you for joining us this morning.

Earlier today, we issued a press release announcing our results for the second quarter of 2026, while updating our guidance for 2026 and maintaining our 3 yearear objectives for the 2026-2028 period.

The company's management, discussion and analysis, and consolidated financial

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