By: Ebenezer Adugyamfi & Emmanuel Ayiku for GhanaianNewsCanada
November 5, 2026
Canadian clothing manufacturer Gildan Activewear has reduced its financial forecast for 2026 after reporting weaker-than-expected third-quarter performance, raising concerns among investors about the impact of changing economic conditions on consumer demand.
The Montreal-based company announced on Thursday that it now expects full-year revenue of between US$5.4 billion and US$5.5 billion, a significant reduction from its previous forecast of US$6 billion to US$6.2 billion.
The announcement triggered a sharp market reaction, with Gildan shares falling as much as 25 per cent on Thursday as investors responded to the lower outlook.
The company also reduced its expected adjusted earnings per share and free cash flow, while withdrawing its previously communicated financial objectives for the 2026–2028 period.
Gildan said the changes reflect a rapid deterioration in macroeconomic conditions and weaker demand across parts of its wholesale and retail businesses.
Third-quarter results fall short of expectations
For the third quarter ended September 27, 2026, Gildan reported net sales of US$1.47 billion from continuing operations, representing a 61.1 per cent increase compared with the same period last year.
The reported revenue growth reflects the expansion of the business following its acquisition of Hanesbrands.
However, the company acknowledged that its results did not meet internal expectations, with the anticipated recovery in consumer demand failing to materialize.
Gildan reported an operating margin of 24.1 per cent and an adjusted operating margin of 27 per cent.
Its diluted earnings per share under generally accepted accounting principles (GAAP) reached US$1.37, representing a 71.3 per cent increase, while adjusted diluted earnings per share rose 54 per cent to US$1.54.
The company generated US$633 million in cash from operating activities and reported free cash flow of US$606 million during the quarter.
Despite the growth in reported earnings and revenue, management said softer market conditions and operational challenges in parts of the business had affected its overall performance.
Revenue and earnings forecasts reduced
The revised financial outlook represents a substantial adjustment to the company’s previous expectations.
Gildan now expects 2026 revenue to reach between US$5.4 billion and US$5.5 billion, compared with its earlier guidance of US$6 billion to US$6.2 billion.
Its expected adjusted operating margin has also been reduced from approximately 21.8 per cent to 20 per cent.
Adjusted diluted earnings per share are now projected to range between US$3.70 and US$3.80, down from the previous forecast of US$4.65 to US$4.75.
The company also reduced its free cash flow expectations from approximately US$1 billion to between US$700 million and US$750 million.
The adjustments indicate that management expects the weaker demand environment to continue affecting business performance into the final quarter of the year.
Consumer spending pressures weigh on clothing sales
Gildan attributed the revised outlook partly to changing economic conditions, including rising interest rates and persistent inflation affecting household essentials.
The company said these pressures are weighing on consumer demand for apparel, creating difficulties for manufacturers and retailers.
Its wholesale business has experienced softer demand trends, while its retail operations have also faced challenges involving product availability and service constraints as customer demand and ordering patterns evolve.
The company said market softness had also affected the pace of anticipated market-share gains.
Brands including Comfort Colors, American Apparel and Champion continued to perform well with customers, but those performances were not enough to offset the broader challenges affecting the business.
President and Chief Executive Officer Glenn J. Chamandy said the anticipated recovery in demand had not developed as expected.
He maintained that the company remained confident in its underlying business strength and long-term growth opportunities, while emphasizing the importance of focusing on areas within management’s control.
Gildan withdraws 2026–2028 financial objectives
Alongside the revised 2026 forecast, Gildan announced that it was withdrawing its previously communicated financial objectives for the 2026–2028 period.
The company explained that the rapid changes in macroeconomic conditions and their effect on demand made it prudent to reconsider its earlier projections.
The decision introduces uncertainty around the company’s medium-term financial targets, although management said it intends to provide an updated long-term outlook at an Investor Day planned for spring 2027.
Gildan said its integration of Hanesbrands was progressing as expected, with most of the initiatives planned for 2026 already implemented.
It remains on track to generate approximately US$100 million in cost synergies during 2026 and continues to target approximately US$250 million in annual run-rate cost synergies by the end of 2028.
Company approves share buyback programme
Despite the reduction in its financial outlook, Gildan announced that its board of directors had approved a new normal course issuer bid allowing the company to repurchase up to five per cent of its issued and outstanding common shares.
A share buyback programme allows a company to purchase some of its own shares from the market, potentially reducing the number of shares in circulation.
The company also confirmed that it completed the sale of Hanesbrands Australia on October 26, 2026.
The sale forms part of its wider capital allocation and business integration activities following the Hanesbrands acquisition.
Gildan said it remained committed to generating strong cash flow, managing its investments carefully and returning capital to shareholders.
What the results mean for Gildan’s business
The latest results highlight the challenges facing major apparel manufacturers as consumer spending patterns change and businesses contend with inflationary pressures.
Although Gildan recorded substantial year-over-year growth in reported third-quarter revenue and earnings, its reduced forecast shows that management is less confident about the pace of recovery in demand.
The company’s acquisition of Hanesbrands has expanded its operations and brand portfolio but integrating the businesses while managing weaker market conditions presents additional challenges.
Investors will now be watching whether Gildan can stabilize demand, improve its retail and wholesale performance and deliver the cost savings expected from the acquisition.
For now, the company says its long-term prospects remain strong, but its revised financial guidance signals a more cautious outlook for the remainder of 2026.
