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Company Perspectives
Gildan is a vertically-integrated marketer and manufacturer of premium quality branded basic apparel. The Company manufactures premium quality basic T-shirts, sport shirts, and sweatshirts for sale in the wholesale imprinted sportswear market of the U.S., Canadian, European, and other international markets. The Company sells its products as blanks, which are ultimately decorated by screenprinters with designs and logos for sale to consumers. Gildan has announced plans to sell its products into the mass-market retail channel, in addition to the screenprint market. In conjunction with this strategy, Gildan is expanding its product-line to include underwear and athletic socks.

History of Gildan Activewear, Inc.
Millions of fashionistas wear Gildan Activewear but probably do not know it. Gildan Activewear, Inc., is a quiet giant in the retail industry, its products sold by the dozen, wholesale, to companies who put their own logos and designs on them. Gildan's "blank" cotton shirts, primarily T-shirts, as well as fleece items, henleys, and polos, are a staple of the worldwide casualwear industry. Rivals Fruit of the Loom (owned by Berkshire Hathaway) and Hanes (owned by Sara Lee Corp.) once held sway in the market, but Gildan overtook them to become the largest T-shirt manufacturer on the continent. Gildan was founded by Greg and Glen Chamandy. Elder brother Greg left the company in 2004 to pursue other interests while Glenn Chamandy continues to run the firm as president and chief executive.

A New Beginning
The immediate precursor to Gildan Activewear, Textiles Gildan, Inc., was formed in 1984 by brothers H. Greg and Glenn Chamandy. Textiles Gildan was a refashioning of the Chamandy family business, originally founded by the boys' grandfather Joseph decades before as a manufacturer of children's casualwear. With the advent of NAFTA (North American Free Trade Agreement), however, the young Chamandys reoriented the family business, doing away with middlemen and concentrating on two stalwarts of the garment trade: plain T-shirts and sweatshirts. Cost was of paramount importance so the brothers outsourced sewing to Central American factories and kept the quality-control end of the business--knitting, dyeing, and finishing--at their home base in Montreal. Most of the former company's equipment was sold to make way for high-tech knitting and dyeing machinery. Garments were sold wholesale, beginning in 1992, in mass quantities and shipped to North American clients via UPS.

In the early 1990s Textiles Gildan had gained a reputation for high-quality, low-cost pullovers and slowly chipped away at the market share of such U.S. undergarment manufacturers as Kentucky-based Fruit of the Loom (FTL) and North Carolina's Hanes. Textiles Gildan's first full year of production in 1994 brought in sales of over $32 million. The following year, the company was renamed Gildan Activewear, Inc., and expanded its product line to include golf-styled collar shirts in several colors. Fruit of the Loom and Hanes, both losing market share, cut prices and fought back against the Canadian upstart with major advertising campaigns.

As the decade came to a close Gildan had become a force to be reckoned with; the company had reached sales of just over $144 million for 1998 and controlled 10 percent of the market, a healthy slice in an industry notorious for slight profit margins and frequent flameouts. The firm had added new products to its clothing line, including henleys and tank tops, and also invested in environmentally friendly dyeing and bleaching systems. New machinery and chemicals went into use, earning Gildan the respect of environmental groups in both Canada and the United States.

The Chamandy brothers, with Greg as chairman and chief executive and Glenn as president and chief operating officer, took Gildan public on the Toronto Stock Exchange (under the ticker symbol GIL) in June 1998, in preparation for entering the New York Stock Exchange (NYSE) the following year. In 1999, as Gildan achieved inclusion at the NYSE and geared up for international expansion, rival garment manufacturer Fruit of the Loom faced bankruptcy, as did several other sportswear and T-shirt firms. Oneita Industries, based in South Carolina, filed for bankruptcy protection in 1998 and shuttered its doors for good in 1999 after 125 years of operation, while two Virginia-based T-shirt and fleece manufacturers, Tultex Corporation and Pluma, Inc., filed for bankruptcy in 1999 around the same time as Fruit of the Loom. Gildan, however, had wrested market share away from all of them for about 15 percent of the cotton T-shirt market. Sales soared accordingly to $223.9 million for 1999 (ending in October), with net earnings of $32.8 million.

The New Millennium: 2000-2002
As the new century got underway, Gildan continued to experience record growth due to its tight cost controls and vertically integrated structure. Sewing, previously outsourced, was now completed in company facilities, as was all knitting, dyeing, cutting, and finishing. Up until 2000 Gildan had sold its products only in Canada and the United States, but the Chamandys decided it was time to expand outside North America. The company also debuted a web site for clients, gildanfinder.com, to easily view products, as it established a network of more than 20 distributors in Western Europe. Product-wise, a new 50-50 T-shirt (50 percent traditional cotton, 50 percent polyester) was selling exceptionally well and additional 50-50 products were in the works. At the close of the fiscal year sales topped $312.4 million, net earnings reached $56.3 million, and Gildan Activewear was ranked the United States' second-largest cotton T-shirt wholesaler behind Hanes.

As Gildan began shipping products to Europe and announced a partnership with a Japanese corporation to sell its casualwear in Asia, struggling Fruit of the Loom filed a lawsuit claiming corporate espionage. Fruit of the Loom alleged a former employee, who was hired at Gildan, engaged in "unfair competition" through trade secrets and "stolen" FTL documents. Though Gildan did possess at least one document, sent by an FTL employee to Gildan's executive vice-president, David Cherry (a former FTL employee), most deemed the information less than valuable. Regardless of the legal skirmish, Gildan's first quarter (ending in January) results were phenomenal, with sales quadrupling the previous fiscal year's figure. Stock prices responded as well, climbing 27 cents per share, up from 6 cents per share for the same period in 2000. Year-end sales rose to $329.1 million for 2001, as market share had risen to almost a third of the cotton T-shirt and pullover market to tie Gildan with market leader Hanes. Gildan had also been helped by the effects of 2000's Trade Enhancement Act, which eliminated duty charges on goods from its Caribbean Basin and Central American facilities, similar to the benefits of NAFTA for Mexico.

In 2002 Gildan continued its upward swing and even attempted a takeover of ailing rival Fruit of the Loom. In the end, FTL was acquired by Omaha-based Berkshire Hathaway, Inc., run by legendary stock-picker Warren Buffett. While the takeover and FTL lawsuit (settled quietly in October 2001 without disclosure) did affect Gildan's bottom line, it was not significantly damaging. Year-end figures for fiscal 2001 climbed to $382.3 million with net earnings of over $66.7 million. Increased capacity had helped spur sales; the company enjoyed new manufacturing and distribution plants in North Carolina and an expanding presence in Honduras and Mexico.

Leading the Industry, 2003 and Beyond
In early 2003 Gildan opened a newly acquired manufacturing plant with state-of-the-art machinery in its home base of Montreal. The company reportedly spent some $20 million to buy and refurbish the 180,000-square-foot Henri-Bourassa facility, which created 150 new jobs. CEO Greg Chamandy commented to Wearables Business (April 2003), "The inauguration of this plant reflects our continued commitment to our business strategy of vertical integration [and] to continue to fulfill our business goal of being the global low-cost producer of apparel for the North American activewear market."

Near the end of 2003 Gildan acquired part-ownership of a yarn spinning plant in Cedartown, Georgia. By this time Gildan operated seven sewing facilities, with three in Honduras, two in Mexico, and one each in Nicaragua and Haiti; two dyeing and finishing facilities in Quebec; three yarn spinning facilities (two in Canada, the one in Georgia); three distribution centers (one in Quebec, two in North Carolina); a cutting plant in New York; and a high-tech integrated textile plant--Gildan's largest at 291,500 square feet--for knitting, dyeing, cutting, and finishing in Rio Nance, Honduras. For fiscal 2003 sales had skyrocketed to $431.2 million and net earnings reached $81.5 million.

At the start of the new fiscal year, in November, Gildan began offering its products in Australia and planned additional Caribbean manufacturing facilities, buying an 18 million-square-foot land tract in the Dominican Republic. In addition, the company's European expansion gained momentum with a total of 37 distributors in 19 countries by January 2004. In mid-2004 Gildan reached an important milestone as the first manufacturer in the wholesale imprinted activewear industry to obtain "Oeko-Tex Standard 100" certification bestowed by Germany's International Textile Research Centre at the Hohenstein Institute and Austria's Textile Research Institute. Gildan was immensely proud of the eco-designation and the company's commitment to environmental awareness.

In August 2004 cofounder Greg Chamandy left Gildan and sold his stake in the company to pursue other business ventures. Younger brother Glenn took the helm of the booming company, which had shipped 27 million dozen T-shirts in 2004, a figure Chamandy believed would more than double within five years. Sales for 2004 reached $533.4 million and net earnings hit $60.3 million, with Gildan topping both Fruit of the Loom and Hanes as North America's largest T-shirt manufacturer. Share prices went from a low on the NYSE of $13.83 per share in October 2004 to a high of $39.13 in September the following year.

In 2005 Gildan, famous for its cost-cutting, was at it again. The company closed two of its Canadian yarn-spinning plants, transferring production to its North Carolina facilities, and took a leap of faith by beginning to sell its own branded activewear, following the lead of competitors Fruit of the Loom and Hanes. Another segue came in early 2006 with the purchase of the Hopkinsville-based Kentucky Derby Hosiery Company for $45 million. Hosiery production was slated to begin in Gildan's high-tech Honduran manufacturing plants; however, the destruction of its sewing facility in San Marcos, Nicaragua, complicated matters. The Nicaraguan plant burned to the ground in June 2006 and most of its operations were sent to nearby Gildan plants or outsourced. Despite the loss of the plant, Gildan continued to soar, besting its own outlook as well as that of industry pundits.

Gildan Activewear, darling of the stock markets, continued to shine in 2006. The little Canadian firm not only came and conquered, but showed American rivals that famous name advertising was not nearly as effective as vertical integration and cost control. Gildan shares traded in the upper $40s for much of 2006; analysts believed prices would top $50 before the end of the year with sales projected to reach at least $700 million, after hitting $653.9 million for 2005.

Principal Subsidiaries
Gildan Activewear SRL; Gildan Activewear Properties (BVI) Inc.; Gildan Activewear San José, S.A.; Gildan Activewear San Miguel, S.A.; Gildan Activewear San Antonio, S.A.; Gildan Activewear Villanueva, S.A.; Gildan Activewear (Clercine), S.A.; Gildan Activewear (San Marcos), S.A.; Gildan Activewear (Rivas), S.A.; Gildan Activewear Castaños, S. de R.L. de C.V.; Gildan Activewear Mexico, S.A. de C.V.; Gildan Activewear Malone, Inc.; Gildan Activewear Honduras Textiles Company, S.A.; Gildan Activewear (UK) Limited; Gildan Choloma Textiles, S.A.; Gildan Honduras Hosiery Factory, S.A.; Gildan Activewear (Eden) Inc.; Gildan Activewear (US Holdings) Inc.; Gildan Activewear Dominican Republic Textile Company Inc.; Gildan Activewear Properties (Dominican Republic) Inc.

Principal Competitors
Fruit of the Loom; Hanes Companies, Inc.; Jockey International, Inc.; Russell Corporation; VF Corporation.

Key Dates
1984 Textiles Gildan, Inc., is founded by the Chamandy brothers.
1995 The company is renamed Gildan Activewear.
1998 Gildan begins trading on the Toronto Stock Exchange.
1999 Gildan begins trading on the New York Stock Exchange.
2001 The company begins selling outside North America.
2004 Cofounder Greg Chamandy leaves the company to pursue other business interests.
2005 Gildan begins selling its own branded shirts.
2006 Gildan buys Kentucky Derby Hosiery Company and starts selling socks.

Additional Details
Public Company
Incorporated: 1984 as Textiles Gildan, Inc.
Employees: 12,000
Sales: $653.9 million (2005)
Stock Exchanges: New York Toronto
Ticker Symbols: GIL
NAIC: 422310 Piece Goods, Notions, and Other Dry Goods Wholesalers; 315223 Men's & Boys' Cut and Sew Shirt (Except Work Shirt) Manufacturing; 315224 Men's & Boys' Cut and Sew Trouser, Slack, and Jean Manufacturing.


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