Gildan Activewear Inc., a prominent Canadian apparel manufacturer, recently faced significant scrutiny due to allegations of inflated sales practices. The accusations, made by Jehoshaphat Research, a Florida-based short-selling firm, resulted in a 19% drop in Gildan’s stock value. This decline erased approximately $3 billion from the company’s market capitalization.
Allegations of Inflated Sales
On Tuesday, Jehoshaphat Research released a report claiming Gildan has engaged in “channel stuffing.” This practice involves encouraging clients to place larger orders than necessary to artificially boost revenue figures. Jehoshaphat stated, “We believe this company has been inflating its revenues for years and is running out of room to continue doing so.”
In response to the report, Gildan defended its practices. The company expressed confidence that its disclosures provide accurate and thorough information regarding its financial situation and governance. Gildan reasserted its fiscal guidance for 2026, projecting annual revenues between $6 billion and $6.2 billion and free cash flow exceeding $850 million.
Market Impact
- Shares of Gildan closed at $70.39 on Tuesday, representing an 18.75% decrease.
- The company’s current market value is estimated at $13 billion.
- Jehoshaphat’s short position in Gildan accounts for 4% of the company’s public float.
Jehoshaphat’s report mentions interviews with seven former Gildan employees, customers, or distributors regarding the alleged sales practices. The firm claims Gildan used extended payment terms of 90 to 120 days to incentivize clients to purchase excess inventory.
Company Background and Leadership Changes
Founded in Montreal, Gildan is best known for producing blank apparel such as T-shirts and sweatshirts. The company gained further attention after a contentious leadership battle, resulting in CEO Glenn Chamandy’s temporary ousting in December 2023. He was later reinstated following pressure from investors.
In August 2025, Chamandy announced Gildan’s acquisition of HanesBrands Inc. for $2.2 billion, which included assuming around $2 billion in net debt. This strategic move aims to bolster Gildan’s presence in the apparel market.
The scrutiny surrounding Gildan highlights the challenges faced by companies in maintaining transparent and ethical sales practices, particularly in a volatile market environment.
