Gildan Activewear Inc "Management Meetings: Investor Feedback and..."

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Gildan Activewear Inc "Management Meetings: Investor Feedback and..."

parent company and may have been somewhat overlooked. FOTL received only minimal

investment or marketing support. As a result, both companies were slow to move

production offshore or modernize operations, while Gildan aggressively built superior

low-cost capacity and entered retailers with both Gildan-branded and private-label

programs. This led to rapid market share shifts. FOTL’s retail share eroded, and Hanes’

once-strong activewear segment stagnated from lack of focus. In summary, Hanes and

FOTL didn’t adapt. They remained one-dimensional, essentially brand-focused without

matching Gildan’s cost efficiency or product innovation, enabling Gildan to steadily take

share and ultimately acquire HanesBrands for a low price.

How sustainable is Gildan’s cost advantage? Gildan’s cost advantage is structural

and underpinned by its vertically integrated manufacturing footprint and scale. The

company manufactures approximately 97% of its products internally, which enables

tight control over costs, quality, and supply chain efficiency. Management estimates a

roughly 25–30% cost advantage relative to competitors, reflecting decades of capital

investment, operational expertise, and supply chain optimization. This level of

integration is difficult for competitors to replicate, particularly as many have shifted to

outsourced, asset-light models.

Why can’t other companies copy what Gildan is doing? Gildan’s business model is

exceptionally hard to duplicate, even for longtime competitors like Fruit of the Loom.

The primary reason is the substantial scale and capital investment required to achieve

Gildan’s cost structure. Management points out the company has 85,000 employees