Full Breakdown
Short-Seller Allegations Trigger Sharp Decline in Gildan Activewear Shares
6/17/2026, 6:18:10 AM
Allegations of Channel Stuffing Spark 20% Share Decline
On June 16, 2026, Jehoshaphat Research issued a report accusing Gildan Activewear of “channel stuffing” – urging distributors to take excess product, extending payment terms to 90-120 days, and using factoring to conceal inventory. It sent Gildan’s shares down 18-25%, erasing about $3 billion of market value.
Background and Key Players
Montreal-based Gildan makes blank T-shirts and fleece. CEO Glenn Chamandy was ousted in Dec 2023, reinstated after shareholders forced the board’s resignation, and led a US$2.2 billion HanesBrands acquisition in Aug 2025. Jehoshaphat’s report draws on interviews with former Gildan employees, customers and distributors.
Alleged Practices and Financial Indicators
Jehoshaphat claims Gildan extended payment terms to 90-120 days, moved half its receivables off-balance-sheet, and raised Days Sales Outstanding to 129 days (195 days at a distributor). It estimates a $510 million inventory surplus, warns of a 20% revenue miss for H2 2026, and notes leverage of 3.3 times.
Impact and Outlook
Closing prices fell from $70.39 (down 18.75%) to $48.50 (down 21.7%). Bloomberg called the tumble steepest, wiping $3 billion and cutting market cap to $13 billion. Gildan’s earnings, due July 30, 2026, project $1.6 billion Q2 net sales and free cash flow above $850 million, with lower channel inventory expected to drag sell-in and December analyst day set to test its response to short-seller claims.
Official Statements & Criticism
Gildan said it is confident its disclosure provides investors with accurate and comprehensive information, including financial and governance details. It reaffirmed 2026 guidance of $6-$6.2 billion revenue and free cash flow. Jehoshaphat flagged governance red flags: tax misrepresentation allegations and the resignation of three senior members of Gildan’s Ethics and Fraud Compliance Committee. Analysts said “cannibalizing future demand” and “insane” Days Sales Outstanding could erode earnings and cash flow.
Conflicting Reports & Gaps
Sources differ on the share decline (18.75% vs. 25%), closing price ($70.39 vs. $50.35 vs. $48.50), and inventory excess ($510 million vs. unspecified). Days Sales Outstanding is reported as 129 days and 195 days at one distributor. The 20% revenue-miss forecast lacks confirmation, and factoring is described as “almost half” of receivables without precise figures.
Verbatim Quotes
- “We believe this company has been inflating its revenues through channel stuffing for years but is finally running out of room to do so, and this will expose the weaker revenue and earnings profile of the business,” — Jehoshaphat Research
- “This pulling-forward of sales has been cannibalizing future demand and inflating the overall growth trajectory of this business,” — Jehoshaphat Research
- “ Gildan Activewear said it 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 Activewear
- “We believe the company’s December analyst day will be a positive catalyst, not one where Gildan has to explain a big guidedown,” — UBS analysts
