Gildan's Ugly Quarter Is a Warning for Anyone Selling Merch Hoodies

Look at the tag inside the last merch hoodie you bought. There is a decent chance it says Gildan. The Montreal company makes the plain tees and fleece that get screen printed into tour shirts, streetwear drops and creator merch, so when Gildan has a rough quarter, the whole hoodie economy should pay attention.

And Thursday was rough. Gildan reported third-quarter net sales of US$1.47 billion, short of its own guidance of US$1.65 billion, and adjusted earnings of US$1.54 a share against the US$1.57 analysts expected, according to The Globe and Mail. Investors bailed. The Globe's headline put the drop at 25 percent during the session, but by the close shares had settled $11.40 lower at $49.04 on the Toronto Stock Exchange, The Canadian Press reported. That works out to roughly 19 percent, which matches the closing price on Yahoo Finance and the Globe's own "nearly one-fifth" description.

What actually went wrong at Gildan?

The short version is that people stopped buying as many clothes as Gildan planned for. The company cut its full-year revenue forecast to a range of US$5.4 billion to US$5.5 billion, down from a previous low end of US$6 billion, and lowered adjusted earnings guidance to US$3.70 to US$3.80 a share from US$4.65 to US$4.75. It also pulled its 2026 to 2028 targets entirely.

"The demand recovery we had anticipated has not materialized as expected," chief executive Glenn Chamandy said in the release. The company blamed rising interest rates and persistent inflation in household essentials for squeezing what consumers spend on apparel.

Desjardins analyst Chris Li said the market already expected macro pressure, but the shift over the past three months looks "much more severe than anticipated," per the Globe. Weather piled on too. On the earnings call, management said unusually warm weather in the U.S. and Europe hurt demand for higher-margin fleece in September, according to a call summary on Yahoo Finance.

Gildan also carries baggage. The Globe notes a short-seller report in June alleging the company inflates sales, the ongoing integration of Hanesbrands, which it took over last year, and the 2023 to 2024 proxy fight over Chamandy's ouster that cost an estimated US$76.8 million before shareholders put him back in charge.

Why should merch sellers care about a Montreal blanks maker?

Because the part of Gildan that sells blanks took the bigger hit. Gildan supplies undecorated apparel in bulk to wholesale distributors and screen printers, the Globe explains. That Wholesale business brought in US$735 million in the quarter, down 10.8 percent from the prior year on a pro forma basis, according to the company's results as published by SGB Media. Retail, which includes Hanes underwear sold in stores, fell 7 percent on the same basis.

Those blanks are everywhere in creator commerce. Print-on-demand services like Printful list the Gildan 18500 Heavy Blend hoodie as a stock product, which means a YouTuber or small streetwear label can sell a Gildan hoodie without ever touching inventory. When screen printers and distributors order fewer blanks, it usually means their customers, from bands to brands to campus clubs, are ordering fewer printed pieces.

One bright spot was the more premium labels. Comfort Colors, American Apparel and Champion "continued to perform well" with Gildan's customers, the company said. That is a hint that buyers who still want merch are trading up to heavier, nicer blanks.

Is the concert T-shirt really a last resort now?

Chamandy said the quiet part out loud on the earnings call. "You go to a rock concert, you can't even afford a ticket. You don't buy the T-shirt because it's a last resort," he said, according to The Canadian Press. He added that "the consumer is basically under pressure," pointing to higher interest rates, oil and food costs.

For anyone whose income leans on merch tables, that line stings. It suggests the impulse shirt at the show is one of the first purchases fans cut when budgets get tight.

Will blank hoodies get more expensive?

Possibly. Chamandy said costs for cotton, polyester, dyes, energy, transportation and labor have gone up and that there is room for price increases, CP reported. The Yahoo Finance call summary says management flagged that inflation in labor, energy and freight may require further price increases in 2027, while arguing that today's volume softness comes from consumer budgets rather than Gildan's own pricing.

Canada looks a little different from the U.S. picture Gildan described. Retail sales here rose 1.2 percent to $74.6 billion in August, with all nine subsectors up, and an advance estimate points to a 0.7 percent gain in September, according to Statistics Canada. Those national numbers do not isolate clothing, though, so they say more about overall spending than about hoodies specifically.

What should Canadian creators selling merch do now?

Start with margins. If blank prices rise next year while fans buy less, the cheapest-possible tee priced high is the product most likely to sit in a bin. Gildan's own results suggest the buyers who remain care about quality, so fewer, better pieces may move faster than a big run of basic shirts.

Second, think about timing. Gildan says it will give an updated long-term outlook in the spring, and the Yahoo summary points to an Investor Day planned for spring 2027. Until then, the company most creators never think about has told everyone, in plain numbers, that the hoodie economy is cooling.