Gildan Activewear Inc: DSOs? Not a Problem. Reiterate Buy Rating

Research evidence excerpt

Gildan Activewear Inc: DSOs? Not a Problem. Reiterate Buy Rating

counts receivable appear as

though they surged to $777M in 4Q25 from $310M in 3Q25. In reality, the

increase is driven by the inclusion of HBI factored receivables. This results in a

distorted view of GIL’s 4Q25 DSOs. We instead incorporate HBI’s entire 4Q25

continuing-operations sales base, which yields an estimated DSO of 106 days (104

days on a TTM basis).

3. We reference true trailing-twelve month (TTM) DSOs in our analysis. The analysis

which fuels the bear thesis frequently references quarterly spot DSOs and, where it

references trailing averages, uses a simple average of the trailing four quarterly

DSOs. We prefer to evaluate the trend on a trailing-twelve-month (TTM) basis

(quarter ending receivables/ sum of trailing four quarterly sales*365), which, in our

view, better normalizes for seasonality, quarter-end timing effects, channel fill and

unwind patterns, and other potential noise.

4. We exclude contribution from HAA and Champion TSA sales and accounts

receivables in the relevant periods. Gildan has stated that HAA is classified as held

for sale and reported as discontinued operations, and the Champion TSA revenue

is excluded from the company’s own pro forma continuing-operations sales

framework because it is not recurring in nature. We also remove estimated

associated receivables of these sales in order to avoid distorting the numerator in

the DSO calculation.

5. We normalize 1Q26 GIL sales and accounts receivable to factor for temporary

dislocation tied to the HBI consolidation. For 1Q26, the work the bear thesis stems

from uses Gildan’s reported sales in the DSO calculation’s denominator. We think

this understates the sales run-rate of the combined business given GIL indicated