Canada's Gildan Q2 sales miss estimates on retail market softness

Overview

• Canada apparel maker's Q2 net sales from continuing operations rose 72% yr/yr but missed analyst expectations

• Adjusted EPS for Q2 beat consensus, rising 32% yr/yr

• Company to sell HanesBrands Australia for about $490 mln to reduce debt

Outlook

• Gildan expects 2026 revenue at the low end of $6.0 bln to $6.2 bln range

• Company sees 2026 adjusted diluted EPS at $4.65-$4.75, up 32.5%-35% yr over yr

• Gildan expects to record $220 mln in tariff refunds in 2026, with most in Q3

Result Drivers

• HANESBRANDS ACQUISITION - Net sales surge mainly reflected the addition of HanesBrands, though volumes were partially offset by integration-related inventory reductions and the non-recurrence of pre-buying ahead of pricing actions

• TARIFF REFUNDS AND COST INITIATIVES - Adjusted gross margin improved due to HanesBrands contribution, lower raw material costs, and a $25 mln benefit from U.S. tariff refunds, partially offset by ongoing tariff costs

• RETAIL MARKET SOFTNESS - Retail sales growth from the acquisition was tempered by broader market softness, cautious inventory builds at large retailers, and lower sell-in from inventory reduction

Company press release: ID:nGNX1MDyKj

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 7 "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the apparel accessories peer group is "buy"

• The stock recently traded at 10 times the next 12-month earnings vs. a P/E of 12 three months ago

Reuters Recommended Reads

• July 29 - VF Corp beats Q1 revenue estimates, raises FY27 outlook

• July 28 - Rocky Brands Q2 profit beats on on tariff refunds, strong demand

• July 30 - Adidas Q2 revenue rises 14% on DTC and e-commerce growth

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)