MONTREAL – October 3, 2026 (STL.News) Gildan Activewear Inc. is facing widening securities-law scrutiny after a short seller questioned the apparel manufacturer’s revenue growth and sales practices, triggering a sharp decline in its shares and subsequently prompting shareholder investigations and proposed class-action litigation.
The latest development came Oct. 2, when Rosen Law Firm said it continues to investigate potential securities claims on behalf of Gildan Activewear (NYSE: GIL) shareholders and is preparing a prospective class action seeking recovery of investor losses.
Importantly, Rosen’s announcement does not say that Rosen has already filed that class-action lawsuit. The firm describes the matter as an investigation and says it is preparing a prospective action.
Separate litigation involving Gildan, however, has already been initiated, including a proposed securities class action in Quebec and another proceeding involving former HanesBrands shareholders in New York.
The expanding legal activity follows a June 16 short-seller report from Jehoshaphat Research questioning Gildan’s organic growth and sales practices.
Gildan has disputed the report’s implications, saying its disclosures provide investors with accurate and comprehensive information.
No final court judgment has established any of the allegations discussed in the shareholder investigations or lawsuits as fact.
Short-Seller Report Triggered 18.7% Plunge
Jehoshaphat Research published a report June 16 questioning Gildan’s organic growth and sales practices.
The research firm disclosed that it held a short position in Gildan, meaning it stood to benefit financially if the company’s shares declined.
The report alleged, among other things, that Gildan’s apparent revenue growth obscured deterioration in underlying organic growth and questioned whether sales were being pulled forward through aggressive channel practices.
Hagens Berman, one of the law firms investigating the matter, says the short seller based portions of its analysis on interviews with former employees, customers and distributors and alleged that Gildan had engaged in improper channel stuffing and revenue-recognition practices.
Bleichmar Fonti & Auld similarly says its investigation focuses on allegations that Gildan pulled sales forward and thereby inflated the appearance of its revenue-growth trajectory.
Those remain allegations.
They are particularly important to characterize carefully because Jehoshaphat had a financial interest in a decline in Gildan’s stock, while the plaintiffs’ firms now publicizing investigations also represent potential shareholder claimants.
The market nevertheless reacted dramatically.
Gildan’s NYSE shares closed at $61.97 on June 15. They fell $11.62 the following session to $50.35, down about 18.75%.
Pomerantz separately calculates the decline at $11.63, with a $50.34 closing price. The one-cent discrepancy appears in secondary market sources, so this report consistently uses the $61.97-to-$50.35 figures reported by BFA.
Gildan Defended Its Disclosures
Gildan responded directly to the short-seller report on June 16.
The Montreal-based company said it was aware of the report and stated:
“The Company 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 also reiterated its fiscal 2026 guidance previously communicated on April 30 and said it did not intend to comment further at that time.
The response matters because no court ruling reviewed for this report has found that Gildan committed securities fraud or improperly recognized revenue.
The dispute therefore remains one between allegations raised by a short seller and plaintiffs’ lawyers, on one side, and Gildan’s defense of its financial disclosures, on the other.
Quebec Class Action Already Filed
The legal situation has progressed beyond shareholder-law-firm investigations in Canada.
On July 6, an application for authorization to institute a class action and for authorization to bring an action for damages under Section 225.4 of Quebec’s Securities Act was filed in the Superior Court of Quebec.
According to Scott+Scott Canada, the proposed class includes investors who acquired Gildan securities from July 31, 2025 through June 15, 2026 and continued holding some or all of those securities on June 16.
The application alleges that Gildan and its executives issued documents containing false or misleading information or failed to disclose material information concerning the company’s financial condition, including the growth, quality, and source of Gildan’s revenue.
Those claims are allegations contained in the proposed proceeding.
The case is currently in what Scott+Scott describes as the authorization stage.
That procedural distinction matters.
Authorization is not a judgment establishing liability, and the allegations should not be reported as findings that Gildan committed securities fraud.
Separate HanesBrands Lawsuit Filed in New York
Gildan is also involved in a separate securities proceeding connected with its acquisition of HanesBrands.
Thomas D. Gambino and Loretta A. Gambino filed a putative securities class action Aug. 4 in New York County Supreme Court.
The docket identifies Gildan, President and CEO Glenn J. Chamandy, other current or former corporate officials and KPMG LLP among the defendants.
The case is categorized as a Securities Act of 1933 proceeding.
Unlike the broader investigations arising directly from the June short-seller report, the Gambino proceeding concerns former HanesBrands shareholders who exchanged HanesBrands shares for newly issued Gildan shares in connection with the December 2025 transaction.
Robbins LLP, which has publicized the action, says the complaint alleges that offering materials used in connection with the HanesBrands acquisition contained false or misleading information.
The plaintiffs contend that the offering materials failed to disclose problems they allege existed with Gildan’s inventory, channel partners, sales practices and expectations surrounding the combined company.
Again, these are litigation allegations, not established findings.
The New York case should therefore not be confused with Rosen’s prospective class action or with the Quebec proceeding.
Multiple Law Firms Investigating Gildan
Rosen is not alone in examining potential shareholder claims.
A review of law-firm announcements and investigation pages shows numerous securities firms have examined or are examining Gildan following the June stock decline or in connection with the HanesBrands acquisition.
They include:
- Rosen Law Firm — investigating potential securities claims and saying as of Oct. 2 that it is preparing a prospective class action.
- Bleichmar Fonti & Auld LLP — investigating whether Gildan misled investors concerning its financial results and the drivers and sustainability of reported revenue.
- Pomerantz LLP — investigating whether Gildan and certain officers or directors engaged in securities fraud or other unlawful business practices.
- Hagens Berman Sobol Shapiro LLP — investigating whether allegations concerning revenue recognition and channel practices are accurate and, if so, whether securities laws may have been violated.
- Bragar Eagel & Squire, P.C. — lists Gildan as an active investigation concerning potential federal securities-law violations or other allegedly unlawful business practices.
- Bronstein, Gewirtz & Grossman LLC — has issued multiple notices concerning an investigation into allegations involving Gildan.
- Robbins LLP — has publicized the already-filed action involving former HanesBrands shareholders who received Gildan shares through the acquisition.
The existence of a law-firm investigation does not establish that securities laws were violated.
Such investigations can end without litigation, and filed complaints remain allegations unless the claims are established through court proceedings or resolved through settlement.
Gildan’s Q2 Results Add Important Context
Gildan has reported another quarter of financial results since the June controversy.
On July 30, the company reported second-quarter net sales from continuing operations of $1.58 billion, up 72.3% from the prior-year period.
The substantial increase reflected the combination with HanesBrands.
Gildan reported:
- Operating margin of 11.1%
- Adjusted operating margin of 22.3%
- GAAP diluted EPS from continuing operations of $0.49
- Adjusted diluted EPS from continuing operations of $1.28
- Cash flow from operating activities of $347 million
- Free cash flow of $326 million
The company also said it had already implemented the vast majority of synergy-capture initiatives planned for 2026. Gildan said it remained on pace to realize about $100 million in synergies in 2026 and continued to expect about $250 million in annual run-rate cost synergies over three years.
Those subsequent financial results do not resolve the allegations concerning Gildan’s earlier revenue practices, but they provide important context when assessing the company’s financial condition after the short report.
Revenue Outlook Moved to Low End of Range
Gildan also updated its full-year outlook.
The company said it expected 2026 revenue to finish at the low end of its previously communicated $6 billion to $6.2 billion range.
It projected an adjusted operating margin of about 21.8%, adjusted diluted EPS of $4.65 to $4.75, and about $1 billion in free cash flow.
Gildan nevertheless maintained its three-year objectives for 2026-2028.
The company also announced an agreement to sell HanesBrands Australia at an enterprise valuation of approximately A$700 million, or approximately $490 million based on the conversion Gildan provided.
Gildan said it would use proceeds from that transaction to reduce debt.
Inventory Comments Deserve Attention
One disclosure in Gildan’s Q2 report is particularly relevant given the short seller’s allegations.
Discussing year-over-year performance on a pro forma basis, Gildan attributed some sales pressure to actions associated with inventory levels and the integration of HanesBrands.
That does not establish that the earlier channel-stuffing allegations were correct.
Nor does it disprove them.
Instead, investors and attorneys are likely to scrutinize future disclosures about customer inventories, sales timing, accounts receivable, payment terms and organic demand because those areas overlap with the questions raised in the June short report.
Future financial reports could therefore become important evidence in determining whether the June allegations reflected temporary inventory dynamics or something more significant.
GIL Shares Remain Near 52-Week Low
Gildan’s shares have not recovered their June losses.
GIL closed at $41.00 on Oct. 2, down $0.92, or 2.19%, for the session.
NYSE trading data show the shares opened at $42.09, reached a high of $42.11 and fell as low as $40.75.
Trading volume totaled 1,976,540 shares.
The stock’s 52-week range was $39.93 to $73.70.
At $41, GIL was about 33.8% below its $61.97 June 15 closing price, immediately before the short report was published.
The shares were also approximately 44.4% below their 52-week high.
That places the stock much closer to its annual low than its high.
Another Sharp Selloff Hit in September
The June decline was not Gildan’s only major selloff.
GIL closed at $46.19 on Sept. 23 before plunging to $40.63 on Sept. 24, a one-day decline of 12.04%.
Volume surged to 8,889,547 shares, up from about 1.04 million shares the previous session.
The unusually large volume suggests Sept. 24 was another significant repricing event for the stock.
However, that decline should not automatically be attributed to the securities investigations or the June short-seller allegations.
Multiple market and company-specific factors can affect daily trading, and the available evidence does not justify assigning the entire Sept. 24 decline to the litigation.
Technical Picture Remains Weak
The verified price data show significant technical deterioration even without relying on inconsistent third-party moving-average calculations.
The stock has fallen from $61.97 immediately before the June short report to $41 as of Oct. 2.
It has also traded as low as $39.93 recently.
That means GIL has surrendered roughly one-third of its market value per share compared with its June 15 closing price.
It is also trading only about 2.7% above its 52-week low.
For this report, STL.News is not publishing exact 20-day, 50-day, or 200-day moving averages or RSI readings because publicly available technical-data feeds reviewed during verification did not provide sufficiently consistent NYSE-dollar datasets to meet our publication standard.
Publishing an unsupported technical number would create unnecessary precision where the underlying dataset cannot be independently reconciled.
The verified price trend itself is clear: GIL remains substantially below its pre-June level and close to its 52-week low.
What Investors Should Watch
Several developments could materially change the legal and financial picture.
Rosen has now publicly stated that it is preparing a class action. The next question is whether the firm actually files that action and, if so, what class period, defendants, and alleged misstatements it identifies.
The Quebec proceeding also bears watching as it moves through the authorization process.
The New York Gambino case presents a separate track because it concerns securities issued to former HanesBrands shareholders and allegations involving the acquisition’s offering materials.
Future Gildan earnings reports will provide additional evidence concerning organic sales, customer inventories, integration performance, margins, cash flow, and management’s ability to achieve its updated 2026 outlook.
Market-data providers currently estimate Gildan’s next earnings release for late October, but the services reviewed do not agree on the exact date: Yahoo Finance lists Oct. 29 while StockAnalysis estimates Oct. 28. Accordingly, an exact reporting date should not be treated as company-confirmed unless Gildan announces it.
Allegations Remain Unproven
The widening number of investigations makes Gildan an increasingly important securities-litigation story, but the procedural distinctions are essential.
Rosen is investigating and preparing a prospective class action.
The Quebec matter is a proposed class action at the authorization stage.
The New York HanesBrands-related action is an already-filed putative securities class action involving a different proposed investor group.
Other firms are conducting their own investigations.
None of those facts establishes that Gildan committed fraud.
Gildan has expressly defended its disclosures, saying they provide investors with accurate and comprehensive information concerning the company, including its financial information and governance practices.
The central question now is whether the short seller’s allegations concerning the quality and timing of Gildan’s historical revenue can ultimately be substantiated through evidence — or whether Gildan’s explanation of its financial performance and disclosures prevails.
For investors, that question remains unresolved.
Disclaimer: Securities-law investigations and complaints contain allegations that may be disputed by defendants and may never be proven. No court ruling reviewed for this report establishes that Gildan Activewear committed securities fraud or engaged in unlawful channel stuffing. A law-firm investigation is not equivalent to a lawsuit, judgment or finding of wrongdoing. This article is provided for news and informational purposes only and does not constitute investment, financial, or legal advice.
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