Gildan Activewear Inc. shares plunged 18.8% on June 16 after a short-seller report accused the apparel maker of inflating revenue through channel stuffing. Multiple law firms have opened investigations into potential securities fraud. The allegations center on claims that Gildan pulled forward sales to mask negative organic growth.
Gildan Activewear shares fell 18.8% on June 16 after a short-seller report alleged the apparel maker inflated revenue through channel stuffing.
"Gildan has been stuffing the channel to make revenues look like they're growing," Jehoshaphat Research said in a June 16 report titled "Stuffing All of the Channel Some of the Time?" The short seller said the practice has been "cannibalizing future demand and inflating the overall growth trajectory of this business."
The stock closed at $50.35 on June 16, down $11.62 from $61.97 the prior session. The report alleged that Gildan's organic growth has been negative for years and that the company obscured the decline through "financial engineering," including transferring almost half its receivables off-balance sheet. The allegations were based on interviews with former employees, customers, and distributors, according to the report.
At least four law firms — Bleichmar Fonti & Auld LLP, Girard Sharp LLP, Rosen Law Firm, and Bronstein Gewirtz & Grossman LLC — have opened investigations into potential securities claims. BFA Law is investigating whether Gildan misled investors about the true drivers and sustainability of its reported revenue. Girard Sharp is also probing claims on behalf of former HanesBrands investors who received Gildan shares in connection with the company's acquisition of HanesBrands on Dec. 1, 2025.
Gildan, a Canadian-based vertically integrated apparel manufacturer, sells T-shirts, fleece, underwear, and socks in bulk to wholesalers, screen printers, and retailers. The company had attributed strong sales results to "share gains in key growth categories" and "strong market response to products introduced which featured key innovations," according to BFA Law's investigation notice.
The decline puts Gildan shares at their lowest since before the HanesBrands acquisition closed. Investors will watch for any response from Gildan's management and for potential class-action filings in the coming weeks.
This article is for informational purposes only and does not constitute investment advice.
