Gildans share price takes major hit following scathing report from short seller

An accusational report targeting Gildan Activewear Inc.'s growth and revenue strategies sparked a near 25% plunge in the manufacturer's share price Tuesday.

Jehoshaphat Research disclosed its short-selling position on Gildan in a 60-page report.

Short selling is defined as an investment strategy in which the investor borrows shares in a corporation's stock and sells them immediately.

It's considered a risky strategy because the investor is counting on repurchasing the stock at a lower price. If the share price climbs instead, the investor loses money.

Gildan's share price closed Tuesday down 18.8% at $50.34 after dropping to $46.55 during trading.

Jehoshaphat's primary claim is that "Gildan got addicted to a growth narrative, and like many addicts it has done unsavory things to feed its addiction." It cited examples going back to 2008.

A key component of Gildan's growth and revenue is its $4.4 billion purchase of Winston-Salem's HanesBrands Inc. in December that has significantly bolstered its U.S. sales. Gildan reported record quarterly sales of $1.16 billion in the first quarter, up 63.8% from a year ago.

"We believe this company has been inflating its revenues through channel stuffing for years, but is finally running out of room to do so," Jehoshaphat claimed.

The group said channel stuffing represents selling more into a distribution channel than is necessary to support underlying demand in order to advance short-term growth.

The group claims putting a spotlight on Gildan's alleged channel stuffing "will expose the weaker revenue and earnings profile of the business."

"This episode will most likely end the same way previous such episodes at this company have ended."

Gildan responded to the Jehoshaphat report with a brief statement saying it "is aware of a report published by a short seller on June 16."

"The company is confident that its current disclosure provides its investors with accurate and comprehensive information regarding Gildan, including with respect to its financial information and governance practices."

Gildan said there are no changes to its most recent fiscal 2026 guidance of revenue in a range of $6 billion to $6.2 billion. That would be up 65.7% at $6 billion, and up 71.3% at $6.2 billion.

Adjusted earnings per share are projected in a range of $4.20 to $4.40, up from $3.51 in 2025.

"Gildan does not intend to provide any further comment at this time," the manufacturer said.

Zagros Madjd-Sadjadi, an economics professor at Winston-Salem State University, said Tuesday the share-price plunge likely was the result of investors "questioning why such a refutation (of the claims) is not forthcoming."

"The short seller report in question raises a number of legal concerns.

The non-answers provided by Gildan may be well and proper from a legal perspective, but they do nothing to assuage investor sentiment because it doesn't offer a point-by-point refuting. Gildan may have been better off not responding at all."

The group claims "there is substantial evidence to support a conclusion that Gildan has been stuffing the channel to make revenues look like they're growing."

"This pulling-forward of sales has been cannibalizing future demand and inflating the overall growth trajectory of this business."

Jehoshaphat estimates that Gildan distributors and other customers are currently "stuffed" with excessive product "to the tune of around $510 million as of the first quarter.

The group claimed there has been "an unusually large, one-time infill - likely from juicing sales by adding Hanes product to the Gildan channel."

"Two customers, one of them a distributor, indicated Gildan's end-of-quarter requests to take product (became) increasingly urgent in 2025, potentially pushing the results of a bad year into 2026.

"We estimate Gildan's revenues would have been declining for the past three years if not for heavy channel stuffing. The Street fails to understand the unlikely acceleration that would be required for this business to grow at 5% annually."

The $4.4 billion sale of HanesBrands to Gildan represented the most recent - but certainly not only - Triad example of what can happen when shareholder groups identify weakness in a publicly traded company.

Separate investor initiatives set in motion in 2023 created the necessary friction that compelled a revamped Gildan board of directors and management to shift into acquisition mode and their HanesBrands counterparts to find a buyer.

Montreal-based Gildan endured a bitter six-month proxy fight over control of the manufacturer that resulted in $76 million in expenditures and the emergence of Browning West LP leading an investor coalition representing a combined 35% ownership stake.

Long-time chief executive Glenn Chamandy was fired by the board in December 2023 and then re-hired in May 2024 following the abrupt resignations of the board who ousted him and the chief executive who replaced him.

Meanwhile, activist investor Barington Capital Group began its investment in HanesBrands in August 2023 with the goal of forcing chief executive Stephen Bratspies and its board into swift action to boost the manufacturer's sagging share price.

As HanesBrands' board and executive management were being pressured by Barington, it became public in early 2025 that Gildan's board and Chamandy - as part of resolving its own divisive shareholder challenges - was considering pursuing large acquisitions that could involve HanesBrands.

Chamandy and the Browning West additions to the revamped Gildan board enticed shareholder support with a "supercharge" vision for revenue and market share growth that they unveiled in April 2024.

The proposal said that one of the five main pillars was that Gildan "can return 67% of its current market capitalization to shareholders through dividends and share buybacks over the next five years."

It projected dedicating 68% of capital allocations going to share buybacks in 2024 to 2028, along with 18% to capital investments and 14% to dividends.

The other four pillars are: gain market share in fashion-basics category by lowering unit costs; gain market share in high-growth fleece category; gain share in private-label apparel by targeting new product "wins;" and introduce aspirational compensation plan tied to value creation.

The most familiar and highest-profile example of short selling in the Triad was activist hedge-fund billionaire Bill Ackman's $1 billion short-selling of Herbalife Ltd. stock in his bid to drive the nutrition supplement company out of business.

Ackman disclosed his short-selling bid on Dec. 19, 2012 - the same day Herbalife officials committed to buying the closed Dell Inc. plant for an East Coast manufacturing hub.

Ackman tried to derail the project from the start, accusing Herbalife of operating as a pyramid scheme that misleads distributors, misrepresents sales figures and sells a commodity product at inflated prices.

Ackman's campaign slogan of "betting on zero" - signaling Herbalife's share price going to $0 - inspired a documentary of the same name.

Ackman competed with Carl Icahn, another hedge-fund activist billionaire who supported Herbalife for more than five years before Ackman conceded defeat in March 2018.

The Street.com estimates Ackman lost at least $780 million, while Icahn told cable business channel CNBC he had a paper gain of at least $1 billion from becoming Herbalife's top shareholder at the time.

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This story was originally published June 17, 2026 at 9:39 AM.