Gildan Activewear Stock (NYSE:GIL), Trade Ideas

Gildan Activewear

Gildan is a vertically integrated designer and manufacturer of basic apparel, including T-shirts, underwear, socks, and hosiery. Its primary market is the sale of blank T-shirts, sweatshirts, and other apparel to wholesalers, major clothing brands, and printers (printwear). Gildan also sells branded clothing through retail and direct-to-consumer channels. Brands include Gildan, American Apparel, Comfort Colors, and Gold Toe. Gildan produces most of its clothing at factories in Latin America and recently began operating a new plant in Bangladesh. Incorporated in 1984, the Montreal-based company operates internationally but generates nearly 90% of its sales in the U.S.

GIL, Gildan Activewear

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Gildan Activewear beats Q4 earnings estimates with a 9% revenue increase and raises dividend by 10%, expects flat to low-single-digit revenue growth for FY24.

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Browning West Comments On Gildan Activewear's Board Refreshment; Urges Support For Its Independent Director Candidates

Management

Gildan Activewear Announced; Board Refreshment; On May 1, 2024 Will Appoint Tim Hodgson As Independent / Non-Executive Chair

Gildan Board Said There Continues To Be External Interest In Acquiring The Company And The Process Is Ongoing

Vince Tyra's Attempt to Copy Former CEO Glenn Chamandy's Strategy is Fraught with Risk Due to Mr. Tyra's Track Record of Value Destruction
Mr. Tyra Unveils Underwhelming Margin Guidance, Speculative Spending, Weak Capital Allocation, and No Long-Term Earnings Per Share or Stock Price Targets
Browning West Urges Shareholders to Support its Slate of Eight Highly Qualified Directors and Strategy for Superior Value Creation
Browning West, LP (together with its affiliates, "Browning West" or "we"), which is a long-term shareholder of Gildan Activewear Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GIL#NYSE">GIL</a>) (TSX:<a class="ticker" href="https://www.benzinga.com/stock/GIL#TSX">GIL</a>) ("Gildan" or the "Company") and beneficially owns approximately 5.0% of the Company's outstanding shares, today issued the following statement regarding the Company's April 15th investor update.
As a reminder, Browning West is seeking to elect eight highly qualified and independent director candidates to Gildan's Board of Directors (the "Board") at the Annual Meeting of Shareholders on May 28, 2024. Browning West's director candidates possess strong track records of value creation, expertise in successful succession planning, relevant industry and governance experience, as well as proven management and board service pedigrees in Canada and the U.S.
"Browning West believes that Vince Tyra's ‘new plan' raises troubling questions about the current Board's stewardship of the Company and confirms our fears that Mr. Tyra may lead Gildan down a similar destructive path as the ones he did at the helm of Fruit of the Loom Inc. and Broder Brothers Co.
Our key questions are outlined below:
<ol>
<li>Why Should Shareholders Allow Mr. Tyra, an Executive With a Record of Failure, to Pursue the Same Strategy as Glenn Chamandy, Who Has a Long Record of Success? Mr. Tyra's ‘plan' is clearly nothing more than a continuation of the Gildan Sustainable Growth ("GSG") strategy, which Mr. Chamandy launched in 2022. In fact, the GSG strategy was positively referenced 14 times across Mr. Tyra's presentation materials and his own statements. We appreciate that the Board is finally reversing its prior, baffling criticism of Mr. Chamandy's growth strategy and acknowledging that he established the best strategy and foundation for the Company. But why should shareholders allow a proven value-destroyer like Mr. Tyra to attempt to deliver this strategy when proven value creator Mr. Chamandy is available and excited to execute the plan he designed? &nbsp;</li>
<li>Why is Mr. Tyra Giving Himself Room to Reduce Margins When the Company Has Margin Tailwinds? Mr. Tyra gives himself room to reduce operating margins by 200 basis points from the current 20% level he inherited from Mr. Chamandy, whereas the Browning West slate's plan seeks to increase operating margins by over 200 basis points from current levels. This is highly concerning because while our plan reflects the opportunity to improve margins by shifting to higher-margin products and lower-cost production facilities in Bangladesh, Mr. Tyra's plan does not appear to capitalize on these opportunities. However, we are not surprised to see underwhelming margin guidance from Mr. Tyra because we observe significant margin degradation in his track record at both Fruit of the Loom and Broder Bros. &nbsp;</li>
<li>Why is Mr. Tyra Proposing to Spend Shareholder Funds on Speculative Investments Like Branding and International Expansion? Mr. Tyra's plan contemplates speculative investments in brand building and international expansion. We are alarmed to hear Mr. Tyra referring to ‘brand' 39 times across his presentation materials and statements. Sadly, Mr. Tyra appears to be introducing to Gildan the same failed branding strategies that doomed his prior employer, Fruit of the Loom. Mr. Tyra's plan also includes a vague strategy to invest in Gildan's international business, an area where Mr. Tyra has no previous experience. In contrast, the Browning West slate's plan calls for a disciplined focus on the few key initiatives that will deliver outsized returns for shareholders with minimal risk. &nbsp;</li>
<li>Why are the Board and Mr. Tyra Persisting with Their Vague and Timid Capital Allocation Policy? We believe that in recent years the Board's vague and timid capital allocation policy has degraded Gildan's earnings per share growth and valuation multiple. Mr. Tyra's plan continues this policy as it does not call for any increased levels of share repurchases despite the Company's current low valuation and low leverage. It also alludes to potential acquisitions with no framework for what would qualify as an acquisition target. We remind shareholders of the dangers of allowing Mr. Tyra to undertake any acquisitions given that he destroyed tremendous value at Broder Bros. with an acquisition-based strategy. In contrast to the current Board's weak capital allocation policy, the Browning West slate's plan is specific and clear, calling for leverage and buyback targets that would supercharge returns by reducing outstanding shares by 36% over five years while also growing the dividend at a 9% annual rate. &nbsp;</li>
<li>Why do the Board and Mr. Tyra Fail to Outline Specific Long-Term EPS and Stock Price Targets? Mr. Tyra fails to outline any specific medium- or long-term earnings per share and stock price targets. In fact, Mr. Tyra's plan includes lower sales growth, lower operating margins, higher capital intensity, and weaker capital allocation relative to the Browning West slate's plan. This obviously suggests far lower long-term potential returns than our plan. We believe that Mr. Tyra is avoiding any specific long-term targets because he lacks relevant experience in low-cost manufacturing and vertical integration, and he does not want to be held accountable by shareholders. In contrast, the Browning West slate's plan provides a clear pathway to at least a $60 USD share price by the end of 2025 and a $100 USD share price over the next five years."</li>
</ol>
Shareholders are encouraged to visit <a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.SuperchargeGildan.com&amp;esheet=53933118&amp;newsitemid=20240416294511&amp;lan=en-US&amp;anchor=www.SuperchargeGildan.com&amp;index=1&amp;md5=844b9794d42ad9d93169a9090114ba8e">www.SuperchargeGildan.com</a>to download a copy of the slate's <a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=https%3A%2F%2Fsuperchargegildan.s3.us-west-1.amazonaws.com%2FSupercharge-Gildan-Operating-Plan-%2528April%2B2024%2529.pdf&amp;esheet=53933118&amp;newsitemid=20240416294511&amp;lan=en-US&amp;anchor=operating+plan&amp;index=2&amp;md5=80f7da3d60b2b8383e889116ee47ce69">operating plan</a>, learn how to vote for Browning West's slate of highly qualified director candidates, and sign up for important campaign updates. Visit SEDAR+ (<a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.sedarplus.ca&amp;esheet=53933118&amp;newsitemid=20240416294511&amp;lan=en-US&amp;anchor=www.sedarplus.ca&amp;index=3&amp;md5=da39364f368918cfed4483ce288ecf1c">www.sedarplus.ca</a>) to review a copy of Browning West's information circular and other relevant materials.

TSX:GIL

Browning West Cautions Shareholders Regarding Gildan Activewear's Risky Path Forward Under CEO Vince Tyra; Browning West Is Seeking To Elect Eight Highly Qualified And Independent Director Candidates To Gildan's Board Of Directors At The Annual Meeting Of Shareholders On May 28, 2024

Gildan Activewear Sees Prelim. Q1 Net Sales Approximately $695M vs $677.45M Est.; Co. Reconfirms 2024 Guidance

RBC Capital analyst Tom Callaghan assumes Gildan Activewear (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GIL#NYSE">GIL</a>) with a Outperform rating and announces Price Target of $41.

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RBC Capital Assumes Gildan Activewear at Outperform, Announces Price Target of $41

<a href="https://www.bloomberg.com/news/articles/2024-04-04/a-fired-ceo-rebel-investor-and-m-a-talk-fuel-battle-over-gildan-s-future?utm_campaign=socialflow-organic&amp;cmpid=socialflow-twitter-business&amp;utm_source=twitter&amp;utm_content=business&amp;utm_medium=social" title="https://www.bloomberg.com/news/articles/2024-04-04/a-fired-ceo-rebel-investor-and-m-a-talk-fuel-battle-over-gildan-s-future?utm_campaign=socialflow-organic&amp;cmpid=socialflow-twitter-business&amp;utm_source=twitter&amp;utm_content=business&amp;utm_medium=social">https://www.bloomberg.com/news/articles/2024-04-04/a-fired-ceo-rebel-investor-and-m-a-talk-fuel-battle-over-gildan-s-future?utm_campaign=socialflow-organic&amp;cmpid=socialflow-twitter-business&amp;utm_source=twitter&amp;utm_content=business&amp;utm_medium=social</a>

'Fired CEO, Rebel Investor and M&A Talks Fuel Battle Over Gildan's Future' -Bloomberg

Hanesbrands Shares Move Higher On Volume; Traders Circulate Bloomberg Report Saying Gildan Looking To Acquire Co

<a href="https://www.theglobeandmail.com/business/article-gildan-sets-april-10-deadline-for-initial-takeover-offers/?utm_source=dlvr.it&amp;utm_medium=twitter" title="https://www.theglobeandmail.com/business/article-gildan-sets-april-10-deadline-for-initial-takeover-offers/?utm_source=dlvr.it&amp;utm_medium=twitter">https://www.theglobeandmail.com/business/article-gildan-sets-april-10-deadline-for-initial-takeover-offers/?utm_source=dlvr.it&amp;utm_medium=twitter</a>

'Gildan sets April 10 deadline for initial takeover offers' -The Globe And Mail

Gildan Activewear Shares Resumes

Gildan Spokesperson Says Board Formed A Special Committee Of Independent Directors To, Review, Consider Merits Of Proposal, Any Alternative Transaction

Gildan Spokesperson Says Several Of These Counterparties Expressed An Interest In Considering A Potential Friendly Transaction With Gildan

Gildan Spokesperson Says Special Committee Conducted Targeted Outreach To A Small Number Of Reputable Potential Counterparties

Gildan Activewear Spokesperson Says In Best Interests Of Gildan To Contact Other Potential Bidders With A View To Maximizing The Value Of Any Potential Transaction

<a href="https://www.europapress.es/galicia/noticia-alcoa-inicia-contactos-potenciales-compradores-san-cibrao-propone-modificar-acuerdo-viabilidad-20240319140345.html?utm_campaign=smartclip_social&amp;utm_medium=Social&amp;utm_source=Twitter">https://www.europapress.es/galicia/noticia-alcoa-inicia-contactos-potenciales-compradores-san-cibrao-propone-modificar-acuerdo-viabilidad-20240319140345.html?utm_campaign=smartclip_social&amp;utm_medium=Social&amp;utm_source=Twitter</a>
&nbsp;

Gildan Activewear Shares Halted, News Pending

WIIM

Gildan Activewear, Inc. shares are trading higher following a Globe and Mail report suggesting the board has put the company up for sale.

<a href="https://www.theglobeandmail.com/business/article-gildan-activewears-board-puts-clothing-manufacturer-up-for-sale-amid/" title="https://www.theglobeandmail.com/business/article-gildan-activewears-board-puts-clothing-manufacturer-up-for-sale-amid/">https://www.theglobeandmail.com/business/article-gildan-activewears-board-puts-clothing-manufacturer-up-for-sale-amid/</a>

'Gildan Activewear's Board Puts Clothing Manufacturer Up For Sale Amid Prolonged Battle For Control Of Company' - The Globe And Mail

Believes the Board Either Failed in its Diligence of Mr. Tyra or Willfully Overlooked His Concerning Prior Behavior, Which Has Created Undue Conflicts and Risks for Gildan
Exposes the Board's Effort to Ramp Up its PR Machine and Shift Blame onto Browning West and Shareholders, Who Have Every Right to be Concerned About Their Investment and Scrutinize the Selection of a Questionable CEO
Urges the Board and Mr. Tyra to Immediately Commence an Orderly Resignation Process and to Work Expeditiously with Browning West to Substantially Reconstitute the Board
Browning West, LP (together with its affiliates, "Browning West" or "we"), which is a long-term shareholder of Gildan Activewear Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GIL#NYSE">GIL</a>) (TSX:<a class="ticker" href="https://www.benzinga.com/stock/GIL#TSX">GIL</a>) ("Gildan" or the "Company") and beneficially owns approximately 5.0% of the Company's outstanding shares, today issued the below statement.
"Recent media coverage and an independent research report suggest the Board has presided over an egregious failure of due care and judgement by overlooking Mr. Tyra's seemingly inappropriate relationship with a subordinate – who is currently an executive at Gildan – during his time as CEO of Broder Bros. We question if the Board uncovered this deeply troubling information during its CEO search process and how the sitting directors got comfortable appointing and retaining a CEO who felt it was acceptable to maintain such a relationship with someone who worked under him. We also question if the Board considered that the historical relationship between these two executives creates undue conflicts and risk for Gildan shareholders and employees.
No amount of deflecting and downplaying will allow the Board to succeed in sweeping this inexplicable lapse in diligence and judgement under the rug. To be clear, Browning West had absolutely no role in the independent research report referenced in recent media coverage and will pursue legal action against any parties that claim otherwise. We believe it is important to emphasize this point given that the Board has ramped up its PR machine and is proactively contacting media in an effort to push blame onto Browning West and shareholders, who have every right to be concerned about their investments in Gildan and to scrutinize the selection of a seemingly unfit CEO.
We urge Chairman Donald Berg and the Board, as well as Mr. Tyra, to recognize that it is in the best interest of all Gildan stakeholders to commence an orderly resignation process and work with Browning West to reconstitute the majority of the Board. The current directors have clearly failed in their assessment of Mr. Tyra in light of his record of value destruction, lack of critical manufacturing experience, and apparent decision to carry on a relationship with a subordinate while he was CEO of Border Bros. Now is the time for Gildan to agree to appoint all of the highly qualified director candidates proposed by Browning West to the Board, so that this unfortunate chapter in the Company's history can end. This will allow for Gildan to once again focus on growing and strengthening its business and creating value for all of its shareholders."

Browning West Issues Statement Regarding Media Reports That Highlight The Gildan Activewear Board's Diligence Failures And Poor Judgement When Appointing Vince Tyra As CEO

Browning West, LP beneficially owns approximately&nbsp;5.0%&nbsp;of Gildan Activewear&#39;s outstanding shares.

Legal

Shareholder Browning West Files Lawsuit Against Gildan And Its Board; Says Company Board Continues To Take Oppressive Actions Which Disregard Rights And Interests Of Shareholders

Gildan Activewear, Inc.&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GIL#NYSE">GIL</a>) shares are&nbsp;<a target="_blank" href="https://www.benzinga.com/pressreleases/24/02/g37232352/gildan-activewear-reports-strong-fourth-quarter-results-and-initiates-guidance-for-2024" rel="noreferrer noopener">trading higher on Wednesday.</a>
The company reported fourth-quarter adjusted earnings per share of 75 cents, beating the analyst consensus of 73 cents. Quarterly revenues of $782.7 million&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/earnings" rel="noreferrer noopener">outpaced the street view of $764.48 million.</a>
Net sales surged 9% year over year. Fourth quarter activewear sales were $644 million, up 8% year over year. The increase in Activewear sales was due to higher volumes, driven by POS as well as higher levels of customer replenishment than the prior year.&nbsp;
Sales in the Hosiery and underwear category were up 11% to $139 million. The increase was mainly due to higher volumes, driven by a combination of better POS and the rollout of new programs in the mass retail channel.&nbsp;
Gildan Activewear generated a gross profit of $237 million, or 30.2% of sales, versus $235 million, or 32.6%, in the prior year.
The company&#8217;s long-term debt as of December 31, 2023, stands at $985 million. Gildan exited the quarter with cash and equivalents worth $89.64 million.
Dividend Raised:&nbsp;The company approved a 10% increase in the amount of the current quarterly dividend and has declared a cash dividend of $0.205 per share, payable on April 8, 2024, to shareholders of record on March 13, 2024.
Outlook:&nbsp;Gildan sees FY24 revenue growth to be flat to up<a target="_blank" href="https://www.benzinga.com/calendars/guidanc" rel="noreferrer noopener">&nbsp;low-single digits.</a>
The firm projects FY24 adjusted EPS of $2.92-$3.07 versus the $3.00 estimate.
Gildan expects an adjusted operating margin to be slightly above the high end of its 18% to 20% annual target range.
Price Action: GIL shares are trading higher by 3.31% to $34.99 on the last check Wednesday. 
Photo via Company

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Gildan Activewear (TSE:GIL) has released an update. Gildan Activewear Inc. announces a strategic refresh of its Board of Directors, effective May 1...

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Gildan Activewear Revamps Board for Future Growth

Gildan Activewear gives Browning West two shareholders

Gildan Activewear gives Browning West two shareholders - (updated)

COLM

CPRI

Press Releases

Browning West Troubled by the Gildan Activewear Board's Desperate and Erratic Behavior Following Concerning News About CEO Vince Tyra

Gildan Activewear Issues Statement in Response to Media Reports

Browning West Contends That Gildan Activewear's Reactionary Sale Process Underscores Why Immediate Board Reconstitution is Required

Browning West's Slate of Highly Qualified Director Candidates Releases Five-Pillar Plan to Enhance Shareholder Value at Gildan Activewear

Gildan Activewear Announces Investor Update on April 15, 2024

Gildan Activewear CEO Vince Tyra provides key focus strategic priorities

Browning West Cautions Shareholders Regarding Gildan Activewear's Risky Path Forward Under CEO Vince Tyra

Gildan Activewear Announces Date for First Quarter 2024 Earnings Release

Gildan Activewear Announces Board Refreshment to Support CEO Vince Tyra and Gildan's Next Phase of Sustainable Growth

Browning West and Glenn Chamandy Comment on Gildan Activewear's Defensive and Reactionary Board Refreshment

Gildan Activewear Class A Sub Vtg Shares

RBC Capital

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