Gildan Falls 19% After Short Seller Revenue Allegation
Gildan shares fell 18.75 per cent on Tuesday after Jehoshaphat Research alleged the company has been inflating sales through channel stuffing. The stock closed at $70.39 and the selloff wiped about $3-billion from Gildan’s market value, leaving the Montreal-based maker of blank T-shirts and fleece sweatshirts at $13-billion.
Jehoshaphat’s 60-page report
Jehoshaphat Research said in a 60-page report that it talked to seven former Gildan employees, customers or distributors. The firm said Gildan had been incentivizing clients to order more product than they may need in a quarter, then extending payment periods to 90 days or 120 days to encourage those orders.
$3-billion disappeared from the company’s market value as the allegation hit a business already under close scrutiny after the board fight that removed Glenn Chamandy as chief executive in December 2023. Gildan investors later forced the board to resign and got Chamandy reinstated, and he returned to a company that has spent years under the gaze of both investors and short sellers.
Gildan’s disclosure defense
Gildan said on Tuesday that it is confident that its current disclosure provides investors with accurate and comprehensive information regarding Gildan, including its financial information and governance practices. It also reiterated its fiscal 2026 earnings guidance, which had called for full-year revenue of US$6-billion to US$6.2-billion and free cash flow above US$850-million.
US$6.2-billion in revenue guidance and more than US$850-million in free cash flow now sit against a report that says the company has been inflating revenues through channel stuffing for years. Jehoshaphat said it believes the practice has been hard to spot because Gildan moves a number of its accounts receivable off its balance sheet by selling them in factoring, a common practice that can make the timing of cash collection look cleaner than the underlying order flow.
4 per cent of Gildan’s public float sits in Jehoshaphat’s short position, giving the firm a direct incentive to press its case after accusing the company of stretching customer demand. If Gildan’s current guidance holds, the immediate test is whether investors accept management’s disclosure or keep pressing on how revenue is being booked.
Tuesday’s close at $70.39 leaves the shares down sharply after a one-day move that erased a sizable chunk of equity value. For shareholders, the next problem is not the stock price alone; it is whether the reported revenue and earnings profile can withstand the channel-stuffing claim without a deeper reset in how the business is judged.
