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Gildan Activewear Inc.’s Sustainable Growth Strategy (GSG) has the company on track to deliver on its three-year targets.
“The successful execution of the three strategic pillars, capacity expansion, innovation, ESG, all of which are pretty much in place today, is definitely moving the company in the right direction,” Glenn J. Chamandy, Gildan’s president and CEO, told investors in a company conference call after posting third quarter results.
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He said the “complete focus of executives on our strategy give us the confidence in our ability to deliver on our three-year growth targets that we had laid out earlier this year for the 2025 to 2027 period.”
Those targets include mid-single-digit sales growth, improved adjusted operating margins over the three-year period, and capital expenditures as a percentage of sale above 5 percent per year on average.
One question centers on the uncertainty over tariffs. “Today, in Bangladesh, we do have tariffs coming back into the United States at a rate of 16.5 percent and that’s factored into our cost savings and everything else we have planned for that facility,” Chamandy said, adding that tariffs would create inflation and that issue would center on elasticity and “how many garments people can buy because costs will go up for consumers.” And while that’s unclear, he emphasized that Gildan’s products are “still very attractively priced in the marketplace,” suggesting that the company might not be as disadvantaged as one might think.
As for production in Central America and possible tariffs there, Chamandy pointed to the free trade agreements in existence today, “which we’re applying to bring our products back into the United States. So, it depends on if they apply tariffs on their free trade agreements or not.”
He also said cotton prices have come down “a little bit” since last year, but noted that there’s still some inflation in the system as labor, transportation and energy costs are still up. Chamandy said that once Bangladesh is fully ramped up, there should be a 25 percent reduction in costs when compared with the production of fashion basics in Central America. Also helping in 2025 will be the company’s yarn optimization effort, which is still in progress and hasn’t yet flowed through to the cost of goods sold yet, he said.
“Let me tell you that we are very excited about the opportunities ahead as we continue to leverage the benefits of our ongoing yarn operation modernization in the United States,” he said, adding that Gilden will also scale up its new Bangladesh operation, which will support the long-term growth of our ring spun products. Further, optimization of operations in Central America will support the growth of its fleece production. Other projects include the development of a new soft cotton technology and a new color blast for Comfort Colors, to name a few initiatives slated for 2025.