Dive Brief:
- Gildan Activewear CEO Vince Tyra has stepped down after about three months in the role, along with the entirety of the company’s board, effective immediately, according to a news release Thursday.
- Browning West, an activist investor group that has been waging a proxy battle against Gildan since CEO Glenn Chamandy was fired late last year, said each of its board of director candidates will stand for election at Gildan’s annual meeting next week. Browning West plans to reinstate Chamandy, according to the news release.
- The news comes days before Gildan’s annual meeting, and follows the announcement of two independent proxy advisory firms backing Browning West’s slate of board candidates, which gave the activist investor a leg up.
Dive Insight:
The outgoing board additionally ceased discussions of selling the company.
“Shareholders have made their views clear as we approach the May 28, 2024 Annual Meeting,” Gildan said in its release. “The outgoing directors believe that it was in the best interests of all Gildan stakeholders for them to resign and not stand for election at the upcoming Annual Meeting, allowing the new Board to be seated so that it can oversee the Company in the most orderly and efficient manner.”
Usman Nabi and Peter Lee of Browning West said in their release that the board candidates were “eager to begin working toward their common goal of delivering enhanced shareholder value.”
“As a long-term, significant investor in Gildan, we take the responsibility of having a Browning West representative on the Board seriously and look forward to the opportunity to deliver enduring value for all Gildan stakeholders,” Nabi and Lee said.
Despite this, David Swartz, senior equity analyst at Morningstar Research Services, said his group was “uncertain much will change at Gildan after Chamandy returns as CEO.”
Browning West’s previously announced operating plan includes a new compensation structure, introducing cost efficiencies and buybacks for debt, and it expects this plan to generate $4.2 billion in sales. Morningstar’s research includes “much more modest 2028 estimates for sales,” per Swartz, of $3 billion.
“Some of Browning West’s assumptions look aggressive to us, especially the expectations for share gains in an industry based on production efficiency rather than brands,” Swartz said in an analyst note. “While we acknowledge that Gildan is a low-cost manufacturer, competitors like narrow-moat Hanesbrands also have efficient production. Moreover, we are unclear as to why the operating model will change much under Chamandy, given that Gildan has been following the Gildan Sustainable Growth strategy that he himself unveiled in 2022.”
