Gildan Activewear Q4 Earnings Miss Estimates, Gross Margin Expands

Core Insights - Gildan Activewear Inc. (GIL) reported fourth-quarter 2025 results with both revenue and earnings per share (EPS) missing the Zacks Consensus Estimate, although both metrics showed year-over-year growth [1] Financial Performance - GIL's quarterly EPS was 96 cents, below the Zacks Consensus Estimate of $1.31, but up 15.7% year over year from 83 cents [2] - Net sales reached $1,078.5 million, a 31.3% increase from $821.5 million year over year, but fell short of the Zacks Consensus Estimate of $1,125 million. Organic sales growth, excluding Hanes' contribution, was 4.9% [3] - Adjusted gross profit rose 37.3% to $347.4 million from $253 million, with an adjusted gross margin improvement of 140 basis points to 32.2% [4] - Adjusted operating income increased 27.3% to $222.9 million, with an operating margin of 20.7%, down 60 basis points from the previous year [6] Category Performance - Activewear category sales grew 10.3% year over year to $787.8 million, driven by HanesBrands' contribution and strong demand from North American distributors [7] - Innerwear category sales surged 170.7% year over year to $290.6 million, primarily due to HanesBrands' contribution, despite some volume reduction [8] Geographical Performance - In the United States, net sales increased 33.7% year over year to $976.6 million, while sales in Canada rose 29% to $34.2 million. International sales grew 5.1% to $67.7 million [11] Financial Health - Operating cash flow rose 20.9% year over year to $606 million, with free cash flow totaling approximately $493 million after $114 million in capital expenditures [12] - The company returned $319 million through dividends and share repurchases in 2025, with a 10% increase in dividends approved for 2026 [13] Future Outlook - For 2026, GIL expects revenues between $6.0 billion and $6.2 billion, with adjusted diluted EPS projected in the range of $4.20 to $4.40 [14] - The company anticipates net sales of approximately $1.15 billion for the first quarter of 2026, with an adjusted operating margin of about 12.9% [16]