Gildan Plunges 25% on Short Seller's Channel-Stuffing Claim

Shares of Gildan Activewear Inc. fell as much as 25% in Toronto on Tuesday, the steepest intraday drop since October 2019, after short seller Jehoshaphat Research published a report accusing the apparel maker of inflating revenue.

The firm said it is short the stock over what it called “channel stuffing” – selling more product into distribution than demand supports. Jehoshaphat said it interviewed former employees and customers and ran an accounting analysis to reach that conclusion.

“This pulling-forward of sales has been cannibalizing future demand and inflating the overall growth trajectory of this business,” the report said. Jehoshaphat forecast a potential 20% miss on analysts’ sales estimates for the second half of the year. “This will expose the weaker revenue and earnings profile of the business.”

Gildan reiterated its fiscal 2026 guidance in a statement and said it “is confident that its current disclosure provides its investors with accurate and comprehensive information.” The stock pared losses to trade down 20% at $69.06 by 1:30 p.m.

The short seller’s report claimed Gildan’s revenues “would have been declining for the past three years if not for heavy channel-stuffing” and that the recent acquisition of Hanesbrands Inc. “adds more drag to the pro forma growth outlook.”

UBS analysts led by Jay Sole saw the selloff as a buying opportunity. They said they do not believe Gildan will miss its 2026 revenue guidance. “We believe the company’s December analyst day will be a positive catalyst, not one where Gildan has to explain a big guidedown,” they wrote in a note.