Why Gildan Activewear Stock Tumbled by 11% This Week

Gildan Activewear (GIL) plunged 11% this week after short-seller Jehoshaphat Research released a 60-page report alleging channel stuffing, tax malfeasance, and accounting irregularities. The report claims Gildan artificially inflated growth by pushing excess inventory into distribution channels beyond actual demand, raising questions about reported sales figures.

The apparel manufacturer issued a brief statement defending its disclosure practices but provided no detailed rebuttal to the specific allegations. The short report marks the latest example of activist research targeting mid-cap consumer companies, with Jehoshaphat Research publicly challenging the company's accounting treatment and tax structure.

Channel stuffing allegations directly threaten revenue quality and future guidance, as any inventory pullback from distributors would hit reported sales. The 11% decline suggests investors are taking the accusations seriously, particularly given the report's length and specificity around accounting practices.