Gildan Activewear (NYSE:GIL) reported fourth-quarter and full-year 2025 results that included a partial-month contribution from HanesBrands following the acquisition’s close on Dec. 1, 2025. Management also initiated 2026 guidance and provided integration updates, including an increase in targeted cost synergies and plans to divest the HanesBrands Australia business.
HanesBrands acquisition and Australia business classified as discontinued operations
Investor relations chief Jessy Hayem said Gildan’s fourth-quarter and full-year 2025 results included HanesBrands’ contribution from Dec. 1, 2025, through Dec. 28, 2025. The company also classified the HanesBrands Australian business (HAA) as “held for sale” and reported it as discontinued operations as of the acquisition close. Unless otherwise indicated, management said figures discussed on the call were from continuing operations and excluded HAA.
2025 results: record revenue from continuing operations and EPS growth
Chamandy said Gildan ended 2025 with record revenues from continuing operations of about $3.6 billion and adjusted operating margins of 21.5%. He reported adjusted diluted EPS from continuing operations of $3.51, up 17% year over year and including HanesBrands’ contribution since the acquisition close.
CFO Luca Barile said fourth-quarter sales from continuing operations were $1.078 billion, up 31.3% year over year. Excluding HanesBrands’ $217 million contribution for the December period, Barile said organic growth was 4.9%.
- Activewear: Sales grew 10.3% to $788 million, reflecting the acquisition and supported by favorable mix and higher net selling prices, along with continued growth with national account customers and “robust demand” for Comfort Colors.
- Innerwear (including hosiery, underwear and intimates): Sales rose about 171% versus last year, primarily due to HanesBrands’ December contribution, partially offset by slightly lower volumes amid broader market weakness.
- International: Sales were $68 million, up 5.1% year over year, driven by the acquisition and partially offset by demand softness, particularly in the U.K.
For the quarter, gross profit was $312 million, or 28.9% of net sales, down from 30.8% a year earlier. Barile attributed the decline to an inventory fair value step-up charge of $35.4 million recorded as part of the HanesBrands acquisition; excluding that, adjusted gross margin was 32.2%, up 140 basis points year over year, driven by pricing actions to offset tariffs, lower manufacturing and raw material costs, and “to a lesser extent” the acquisition mix.
SG&A expenses rose to $125 million from $78 million, primarily reflecting the combination with HanesBrands. Adjusted SG&A was $124 million, or 11.5% of net sales, with Barile citing purchase accounting impacts, including amortization of intangible assets recorded in the acquisition.
Adjusted operating income was $223 million, or 20.7% of sales, versus 21.3% a year earlier, which Barile said mainly reflected HanesBrands’ lower adjusted operating margin. Net financial expenses increased to $43 million, primarily due to higher borrowing levels associated with the acquisition. GAAP diluted EPS from continuing operations was $0.32 for the quarter versus $0.86 a year ago, while adjusted diluted EPS was $0.96, up 16%.
For the full year, operating cash flow (including discontinued operations) was $606 million. After $114 million of capital expenditures, Barile said free cash flow was about $493 million. The company returned $319 million to shareholders in 2025 through dividends and repurchases of about 3.8 million shares under its NCIB program. Gildan ended the year with net debt of $4.417 billion and a leverage ratio of 3.0x net debt to trailing 12-month pro forma adjusted EBITDA.
Synergy target raised; manufacturing changes and Bangladesh expansion
Chamandy said the company is raising its expected run-rate cost synergies to approximately $250 million over the next three years, up from an original $200 million target. Management now expects about $100 million per year in 2026 and 2027, and at least $50 million in 2028, and said it will continue pursuing additional synergies beyond the revised target. One-time restructuring costs are expected to remain within a “1-to-1 ratio” to the cost synergies generated.
As part of footprint optimization, Chamandy said Gildan decided to close two Hanes textile factories in early 2026, shifting volumes into Gildan’s network. Management described near-term capacity tightness and said it is proactively undertaking a temporary reduction of inventory levels across customer channels, with production levels expected to be optimized and increased through 2026 to support growth into 2027.
Chamandy also announced plans to proceed with phase two of the company’s Bangladesh complex. Over the next 18 months, Gildan expects to begin construction of a second large-scale textile facility, with initial production expected in the later part of 2027 to support growth plans for 2028. Management said supporting infrastructure is already in place and the investment remains within capital spending guidance.
2026 guidance: integration execution, inventory actions, tariffs, and deleveraging
For 2026 continuing operations (excluding HAA), Barile guided for revenue of $6.0 billion to $6.2 billion, adjusted operating margin of approximately 20%, capital expenditures at about 3% of net sales, adjusted diluted EPS of $4.20 to $4.40, and free cash flow above $850 million. He said the guidance excludes HAA, which management expects to contribute about $675 million in 2026 net sales and $0.21 in diluted EPS (discontinued operations).
Management also noted the outlook reflects the expiry of a HanesBrands transition service agreement related to its divestiture of Champion, representing slightly over $100 million in 2025 sales. Barile said the guidance incorporates the company’s proactive inventory reductions tied to accelerated integration actions, continued optimization of its operating footprint and commercial mix, and tariff-related assumptions, including the “expected positive impact” of a Feb. 20, 2026 U.S. Supreme Court decision invalidating certain tariffs and subsequent announcements by the U.S. administration. He added that higher tariff costs incurred earlier remain embedded in inventory costs and that the company’s outlook does not reflect potential tariff refunds.
For the first quarter of 2026, Gildan expects net sales from continuing operations of about $1.15 billion and an adjusted operating margin of approximately 12.9%, reflecting higher SG&A from purchase accounting impacts and a timing difference between integration-related costs and benefits. Management said it expects the Q1 sales outlook to be affected by inventory reductions and by comparisons to a stronger Q1 2025 that included customer pre-buying ahead of potential tariffs.
On capital allocation, Barile reiterated there will be no share repurchases until net leverage approaches the midpoint of the company’s 1.5x to 2.5x target range. He said free cash flow generation and a potential HAA divestiture are expected to support deleveraging, and the company intends to use proceeds from any HAA sale to pay down debt, while “largely offsetting” expected earnings dilution from the divestment. Management said it has engaged bankers and that the Australia process is underway, but it does not plan to provide further updates until a transaction is approved or the process concludes.
Finally, the company said it will change segment disclosure beginning in Q1 2026, moving from activewear/innerwear reporting to a retail and wholesale basis to align with its go-to-market structure, and expects to provide supplemental 2025 pro forma revenue disaggregation with first-quarter 2026 results.
About Gildan Activewear (NYSE:GIL)
Gildan Activewear Inc (NYSE:GIL) is a vertically integrated manufacturer and wholesaler of branded basic apparel, including activewear, socks, hosiery and underwear. Headquartered in Montreal, Quebec, the company produces a wide range of products such as T-shirts, fleece garments, sport shirts, performance wear, and shapewear under its Gildan, Anvil, Comfort Colors, Gold Toe, Peds and Silks brands. Leveraging its in-house knitting, dyeing, cut-and-sew and finishing operations, Gildan supplies blank apparel to screen printers, promotional product distributors and major retailers around the world.
Since its founding in 1984 by Glenn J.
