Gildan Faces Securities Suit Over Alleged $500 Million Channel Stuffing

Gildan Activewear faces a proposed securities class action that alleges the Montreal-based apparel maker inflated revenue by pushing roughly $500 million in excess merchandise into its distribution network. The suit, filed Oct. 15 in the U.S. District Court for the Northern District of New York, targets the company at the top of its executive ranks.

Investor Beda Cortez filed the complaint. It names Gildan, president and chief executive officer Glenn Chamandy, former finance chief Rhodri Harries, and his successor Luca Barile as defendants. The case covers investors who bought Gildan securities between Feb. 19, 2025 and June 15, 2026.

What does the suit allege?

Cortez claims Gildan pushed distributors to buy more merchandise than their customers needed. Those orders lifted current sales but drained business from later quarters, according to the complaint.

The suit also challenges:

• Revenue figures in Gildan's 2024 and 2025 annual filings
• Management's assurances about the strength of its internal financial controls

The allegations rest heavily on a June 16 report from short seller Jehoshaphat Research, which accused Gildan of loading distributors and customers with excess inventory. Jehoshaphat estimated the product overhang at about $500 million, according to the complaint and an Oct. 16 notice from shareholder law firm Robbins LLP. The firm disclosed it was shorting Gildan stock, betting the shares would fall.

The short seller said Gildan offered incentives and extended payment terms to push distributors to order sooner. Those purchases boosted current results by pulling forward orders that would otherwise land in later quarters, Jehoshaphat claimed.

How did the market react?

Gildan's New York-listed shares fell $11.63, or 18.7 percent, to close at $50.34 on June 16, the day the short report landed. That single-session drop anchors the damages theory in the complaint.

Gildan defended its disclosures in a statement issued the same day. "The company is confident that its current disclosure provides its investors with accurate and comprehensive information regarding Gildan," it said. The company said that confidence extended to its financial information and governance practices. It also reiterated its fiscal 2026 guidance and said it did not intend to comment further.

Where do Gildan's numbers stand now?

Gildan updated its outlook in July. It forecast full-year revenue at the low end of its previously announced $6 billion to $6.2 billion range.

The company completed its HanesBrands acquisition in December 2025. In the second quarter, it reported net sales from continuing operations of $1.58 billion, up 72.3 percent year over year, reflecting the enlarged portfolio.

The integration scale matters for the supply chain. A distributor network absorbing two combined apparel giants is exactly where inventory discipline, order timing, and revenue recognition come under the sharpest scrutiny.

What happens next in court?

The lawsuit seeks damages, interest, and legal expenses for alleged violations of federal securities laws, along with a jury trial. A jury would set the damages amount if the case reaches trial.

Investors who want to serve as lead plaintiff have until Dec. 14 to file a motion, according to Robbins LLP's notice. Lead plaintiff selection will shape who controls the litigation strategy.

What should sourcing and compliance teams watch?

For Gildan's distributors and wholesale customers, the case turns commercial practices — early-order incentives, extended payment terms, and inventory loading — into potential securities-law evidence. Suppliers and buyers negotiating volume commitments with Gildan should expect closer scrutiny of order timing and inventory positions while the suit proceeds. The compliance decision is straightforward: document every incentive-driven forward buy and track inventory sell-through against the $500 million overhang estimate until the court resolves the claims.