The Gildan Age

Gildan isn’t exactly a household name, but the company has outfitted family reunions, college orientation weeks, and bachelor parties since 1984. The Canadian T-shirt and sweatshirt giant provides blanks to companies like Gold Toe Brands — which Gildan bought in 2011 — as well as Under Armour and New Balance. That’s on top of supplying garments to pretty much every website that lets you design a T-shirt. The edge Gildan’s got over other cheap shirt sellers? Its factories are based in South and Central America, keeping the product closer to its consumer base. It’s a big reason why, despite some turbulence in the last year, the brand has largely maintained its status as the blanks maker.

The main reasons Gildan has been able to pull that off: 

In 2011, Gildan was the top U.S. print-wear brand, per Nielsen. Gildan’s stock price has dropped in the last two months, though. The company is playing tug-of-war with an ousted CEO as investors push back against his firing (the board claimed he was too focused on personal business pursuits, like a Barbados golf course). But the Succession-esque drama hasn’t eclipsed the company’s core strengths. 

Gildan is very good at making and shipping. That’s kind of it and that’s kind of genius. The global blank apparel market size was estimated to be about $13.99 billion in 2022, according to business consulting firm Grand View Research, and is expected to grow at a CAGR of 4.7% from 2023 to 2030. Currently, Gildan estimates its market share in blank tees to be 20-30%, so it makes sense that the company would just return to what it’s good at instead of trying to sell directly to customers. 

“Wandering from your core competency is a dangerous thing to do for your core enterprise,” Mark A. Cohen, Director of Retail Studies at Columbia University’s Business School, tells SPY. “And companies do it over and over again. You think something is compatible with your core and it’s not.” 

In 2011, Gildan started producing branded tees and underwear. Some are still available at retailers like Amazon and Wal-Mart, but the splashy attempt to generate name recognition — the company signed a multi-year sponsorship deal with the New Mexico Bowl — wasn’t successful. 

“They were able to get a 10% market share in their main category but it stalled out,” explains David Swartz, a Morningstar analyst who follows Gildan. “In reality, most Americans had never heard of the brand, so they were having trouble trying to one-up brands like Hanes and Fruit of the Loom.” 

On top of a lack of name recognition, Gildan also wasn’t making a product that people wanted to buy. They don’t want a mid-tier brand; stores like Walmart and Target typically stock one or two higher-priced products in a category alongside their own low-priced products, creating options for those who want to spend a lot on something quality and those who want to spend a little on something functional. Gildan tried to produce something somewhere in between, quality and price-wise, and it fizzled out. 

“They knew a lot about making T-shirts, but they didn’t know anything about styling, marketing, or selling the product itself,” Cohen says. 

That’s presumably why the brand bought American Apparel at a bankruptcy auction in 2016 American Apparel was, in addition to being a cultural phenomenon thanks to its porny ads for basics, a proudly USA-made brand. But after Gildan rebooted AA, it started to offer both “U.S.-made” and “globally made” versions of its most popular items. The cheaper “globally made” versions moved faster. And Gildan went, more or less, back to doing what it had always done: Manufacturing abroad and shipping. Dirt-cheap production comes at a cost: numerous workers and labor rights activists have accused Gildan of labor rights violations and unionization suppression efforts over the years, including allegations that fumes from the company’s machinery disabled employees permanently.

Other than cheap labor, the other profit advantage to Gildan’s factories in the Caribbean and South America is proximity to its consumer base. It’s impressive that Chinese companies can get custom-printed shirts across the world in eight days, Cohen says, but it’s never going to compete with the speed a factory on this side of the globe can offer. That’s important in a market where customers demand products fast – what use is a Little League championship T-shirt after the game is over? And with its recent factory opening in Bangladesh, the company is looking to address its own handicap in the East. 

“The world keeps shrinking…time is important in the fashion business,” Cohen says. “Think of the Super Bowl shirts being made in limited quantities that will step up in production closer to the actual game,” he says. “My guess is that Gildan has a long history of hedging their bets and setting up shop wherever they can take advantage of cheap labor and logistics support.” 

According to Swartz, Gildan’s factories outside of the U.S. are also good for the company tax-wise; the company essentially pays no taxes, he says, which is an advantage, even if its competitors aren’t paying much in the first place either. Gildan is Canadian, and there’s a tax treaty between Gildan and Barbados that Canadian companies milk to great advantage.  

“Essentially, they’re a Canadian company that’s not paying any taxes in Canada,” Swartz says. “Most of the companies in this industry are good at avoiding taxes because of their multinational statuses.” 

Another pro for Gildan has been a lack of competition in its niche. That’s also a con — unfortunately for Gildan, it’s beholden to the market climate. Last year, print-wear demand was pretty uneven, for instance, which partially explains Gildan’s recent lukewarm performance. And in 2020, when there weren’t many corporate retreats, high school reunions, or baby showers, Gildan’s profits plummeted, even as people were otherwise spending a lot of money on trinkets and goods. According to a 2020 Census Bureau survey, e-commerce sales increased by $244.2 billion — about 43% — in 2020, rising from $571.2 billion in 2019 to $815.4 billion in 2020. Not that Gildan saw much of that. 

It’s why Fruit of the Loom, Hanes, and other potential competitors don’t want to get involved in Gildan’s business, Swartz adds. 

“Gildan often doesn’t have great visibility with the consumer,” he says. “Things can sometimes drop off significantly by surprise — it’s a less predictable business.”