Equities

Gildan CEO Battles Activist with Growth Plan, Eyes Europe Expansion

New CEO Vince Tyra unveils growth strategy for Gildan amid shareholder battle, focusing on brand revitalization and overseas expansion.

By Alex P. Chase

4/15, 17:46 EDT
CF Industries Holdings, Inc.
Gildan Activewear, Inc.
Goldman Sachs Group, Inc.
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Key Takeaway

  • Gildan's new CEO Vince Tyra unveils a growth strategy focusing on revitalizing American Apparel and expanding in Western Europe, targeting high-single to low-double digit annual profit growth.
  • Amidst a shareholder battle, Browning West LP pushes for former CEO Glenn Chamandy's reinstatement, proposing a plan to double profits and target over $100 stock price by 2028.
  • Gildan engages Goldman Sachs and others for strategic advice amid sale considerations, with a market cap of around $6 billion amidst shareholder division on the company's future direction.

CEO's Growth Strategy

Gildan Activewear Inc., under the leadership of newly appointed CEO Vince Tyra, has announced a comprehensive plan aimed at boosting the company's profit over the next five years. This strategy includes revitalizing the American Apparel brand and expanding Gildan's presence in overseas markets, particularly focusing on Western Europe. Tyra, who took over the helm in December following the dismissal of longtime CEO Glenn Chamandy, has outlined several initiatives to increase brand awareness and reinvigorate what he describes as "dormant" segments of the business. Despite not setting a specific stock price target, Tyra's plan aims for a growth-adjusted annual profit target of high-single to low-double digits and a compounded annual revenue growth rate in the mid-single digit through 2028.

Shareholder Activism and Opposition

The backdrop to Tyra's strategic plan is a contentious battle for control of Gildan, instigated by investment manager Browning West LP. Browning West has been vocal in its criticism of the current board and has led a campaign to reinstate former CEO Glenn Chamandy, garnering the support of about a third of shareholders. This campaign has sparked a significant debate over the company's direction, with Browning West releasing an operating plan in March that aims to double profits and boost the stock to more than $100 by 2028, focusing on cost-cutting and expanding production in Bangladesh. In contrast, Tyra's strategy does not advocate for a merger or acquisition approach, despite reports that Chamandy had previously explored acquiring two major apparel distributors valued at over $3 billion in total.

Financial and Strategic Outlook

Gildan, which boasts more than 40,000 employees and $3 billion in sales, is at a critical juncture. The company has engaged Goldman Sachs Group Inc., RBC Capital Markets, and Canaccord Genuity Group Inc. for advice amidst a review that could lead to a sale, following an expression of interest from an unnamed potential buyer. The company's market capitalization stood at around $6 billion as of the latest reports. Both Browning West and other shareholders, including Turtle Creek Asset Management, have expressed opposition to the board's sale process, highlighting a divide among stakeholders regarding the best path forward for Gildan.

Management Quotes

  • Vince Tyra, CEO of Gildan Activewear Inc.:

    "My first few months as CEO have confirmed my belief that Gildan’s core fundamentals are strong and that we are in a great position to unlock further potential and launch the next phase of our growth."