Short Seller Accuses Gildan of Channel Stuffing, Stock Plunges Over 20% in Single Day
0xBroomberg
Short seller Jehoshaphat Research accused Canadian apparel giant Gildan Activewear of inflating revenue through prolonged channel stuffing, sending shares down as much as 25% intraday before paring the loss to about 20%. Gildan denied the claims but offered no point-by-point rebuttal.
What happened?
Gildan fell as much as 25% on the Toronto Stock Exchange Tuesday, the steepest intraday drop since October 2019, before narrowing to –20% at C$69.06 by 1:30 p.m. local time.
The trigger: a short report from Jehoshaphat Research making one central allegation — Gildan has systematically used channel stuffing to inflate revenue.
In plain terms = the company pushed excess inventory onto distributors to boost reported sales, even though end consumers never bought the goods.
What does the short report say?
Jehoshaphat says its findings draw on interviews with former employees and customers plus forensic accounting, concluding bluntly: "Absent massive channel stuffing, Gildan's revenue has actually been declining for the past three years."
The firm forecasts that the pull-forward will leave Gildan's second-half sales roughly 20% below consensus, dragging overall earnings.
The report adds that Gildan's recent acquisition of underwear brand Hanesbrands will further weigh on post-merger growth prospects.
How did the company and the Street respond?
Gildan issued a statement reaffirming its FY 2026 guidance, saying it is "confident that its current disclosures provide investors with accurate, comprehensive information" — but offered no specific response to the channel-stuffing allegation.
This means → the point-by-point rebuttal the market most wanted to hear did not materialize; the vagueness itself becomes an uncertainty factor.
UBS analyst Jay Sole and his team called the selloff a buying opportunity, arguing Gildan will not miss its 2026 revenue guidance and predicting the December analyst day will be a "positive catalyst."
Is this short seller credible?
This is Jehoshaphat's second challenge to a Canadian-listed company's accounting practices within the past year.
The prior target was subprime lender Goeasy Ltd. — Jehoshaphat alleged delayed recognition of bad loans. Goeasy denied it at the time, but in March disclosed larger-than-expected loan losses, and the stock slumped.
This reflects a track record that markets cannot dismiss; the Goeasy outcome is now a key reference point for assessing the credibility of the Gildan allegations.
Content is for reference only, not financial advice.