Gildan Activewear Announces Record Second Quarter Results Before Yarn-Spinning Charge, Reconfirms Recent Upward Revision of Full

Gildan Activewear Announces Record Second Quarter Results Before
Yarn-Spinning Charge, Reconfirms Recent Upward Revision of Full Year Guidance
and Declares 2-for-1 Stock Split
- Second Quarter E.P.S. Before Special Charge up by 42.3% over Strong Prior
Year Comparative - 


MONTREAL, May 5  /PRNewswire-FirstCall/ -- Gildan Activewear Inc. (GIL; TSX and
NYSE) today announced its financial results for the second quarter and six
months ended April 3, 2005. The Company also reconfirmed its recently increased
earnings guidance for the balance of the fiscal year, and announced that its
Board of Directors has approved a 2-for-1 stock split, to be effected by way of
a stock dividend. All earnings per share data in this release are stated prior
to the stock split.

  Second Quarter Sales and Earnings
  ---------------------------------



After reflecting a special charge of U.S. $7.8 million after-tax or U.S. $0.26
per share for the closure of its Canadian yarn-spinning facilities, Gildan
reported second quarter net earnings of U.S. $14.3 million or U.S. $0.48 per
share, the same as the second quarter of last year. Earnings in the second
quarter of last year included the U.S. $0.04 per share negative impact on cost
of sales of revaluing opening inventories, due to the adoption of the U.S.
dollar as the Company's functional currency at the beginning of the 2004 fiscal
year. Excluding special items in both years, earnings increased to U.S. $22.1
million or U.S. $0.74 per share, up respectively 43.5% and 42.3% from U.S.
$15.4 million and U.S. $0.52 per share in the second quarter of fiscal 2004.
Gildan announced on April 6, 2005 that it expected E.P.S. to be at least 10%
above the top end of its previous guidance for the second quarter, which had
called for E.P.S. before the special charge of U.S. $0.60 - U.S. $0.65 per
share.

Compared to last year, the increase in second quarter net earnings before
special items was driven by increased selling prices and reduced promotional
activity, continuing growth in unit volume sales and more favourable product-
mix. These positive variances were partially offset by increased costs for
cotton, energy and transportation, the impact of lower capacity utilization on
the efficiency of the Canadian yarn-spinning facilities which were closed in
March 2005, higher selling, general and administrative expenses and higher
depreciation.

"We are pleased that we have continued to deliver very strong earnings growth,
and that we have significantly exceeded our original expectations for the
quarter", commented Glenn J. Chamandy, President and Chief Executive Officer.
"Moreover, industry conditions continue to be favourable, giving us confidence
in our positive outlook for the balance of the fiscal year".

Sales in the second quarter amounted to U.S. $165.3 million, up 16.9% from the
second quarter a year ago, reflecting a 10.4% increase in unit shipments,
higher selling prices and more favourable product-mix. During the second
quarter of fiscal 2005, the Company continued to be capacity- constrained,
pending the start-up of its new textile manufacturing facility in the Dominican
Republic. The overall supply/demand balance in the wholesale activewear
industry also continued to be in good balance, with supply shortages for some
products.

The value of the S.T.A.R.S. market and market share data for the U.S. wholesale
distribution market continues to be undermined by non-participation by major
distributors. With this caveat, the table below summarizes the S.T.A.R.S. data
for the quarter ended March 31, 2005. In calculating year-over- year growth
rates, S.T.A.R.S. has adjusted prior period comparatives to exclude sales
through distributors no longer participating in the S.T.A.R.S. report.

  >




The Company indicated that it may not continue to provide S.T.A.R.S. data in
the future, due to concerns regarding the completeness of the information
provided to S.T.A.R.S.

Gross margins in the second quarter were 30.1%, compared with 27.3% in the
second quarter of last year, after increasing last year's gross margins to
exclude the negative impact of the functional currency adjustment on cost of
sales. The significant increase in gross margins reflected higher selling
prices and reduced promotional activity, together with more favourable product-
mix, against the background of market conditions where the Company was unable
to drive further customer demand for its products due to capacity constraints.
The higher selling price realizations, combined with continuing manufacturing
efficiencies, more than offset the negative margin impact of higher cotton,
energy and transportation costs and inefficiencies resulting from the reduced
capacity utilization of the Canadian yarn-spinning operations.

Selling, general and administration expenses were U.S. $18.3 million, or 11.1%
of sales, compared with U.S. $15.2 million, or 10.7% of sales, in the second
quarter of fiscal 2004. The higher SG&A expenses reflected higher distribution
expenses, provision for higher performance-related compensation expenses, and
the stronger Canadian dollar, in addition to the continuing development of the
organization to support the company's ongoing growth strategy.

The results for the second quarter included a special charge of U.S. $7.8
million after-tax (U.S. $11.9 million pre-tax) or U.S. $0.26 per share for the
closure of Gildan's Canadian yarn-spinning facilities. On February 1, 2005, the
Company announced plans to close its two Canadian yarn-spinning facilities, and
relocate the majority of the yarn-spinning equipment to a new joint-venture
facility in the U.S. The amount of the special charge is the same as had been
estimated in February.

The financial results for the second quarter of fiscal 2005 include an income
tax recovery of U.S. $2.7 million, due to the impact of the special charge.
Excluding the special charge, the tax rate in the quarter was 5.9%, compared to
6.8% in the second quarter of fiscal 2004.

  Six Months Earnings
  -------------------



Net earnings for the first six months of fiscal 2005 were U.S. $30.5 million,
or U.S. $1.02 per share, before the special charge for the closure of the
yarn-spinning facilities, up respectively 48.8% and 47.8% from U.S. $ 20.5
million or U.S. $0.69 per share in the first six months of last year, after
adjusting last year's earnings for the negative impact of the functional
currency change on cost of sales as a result of revaluing opening inventories
which were consumed in the first half of fiscal 2004. Net earnings and E.P.S.
for the first half of fiscal 2005 were U.S. $22.7 million and U.S. $0.76 per
share after the special charge, compared with net earnings and E.P.S. as
reported of U.S. $17.2 million and U.S. $0.58 per share in the first six months
of fiscal 2004.

  Earnings Outlook
  ----------------



On April 6, 2005, the Company increased its guidance for the full fiscal year
from approximately U.S. $2.60 per share to approximately U.S. $2.80 per share
before the special charge, and approximately U.S. $2.54 per share after the
charge. The Company continues to be comfortable with its revised guidance. The
Company projects E.P.S. of approximately U.S. $1.00 per share for the third
quarter, up approximately 13.6% from U.S. $0.88 per share in the third quarter
of fiscal 2004.

  Cash flow
  ---------



During the second quarter, the company used U.S. $27.4 million of its cash and
cash equivalents in order to finance a seasonal increase in accounts receivable
and capital expenditures, primarily for the construction of the new Dominican
Republic textile facility as well as to complete the expansion of the U.S.
distribution center in Eden, N.C., in order to position the Company for its
entry into the retail channel. The Company ended the second quarter of fiscal
2005 with cash of U.S. $30.0 million.

The Company is now projecting capital expenditures of approximately U.S. $85
million for the full fiscal year, including 100% of the yarn-spinning
investments made by Gildan's joint-venture with Frontier Spinning Mills, Inc.,
which is now fully consolidated in Gildan's financial statements. The Company
has increased its production targets for its Dominican Republic facility for
fiscal 2006, which will allow it to defer the construction of its planned new
textile facility in Nicaragua. With the incremental production from the
Dominican Republic, the Company expects to have sufficient capacity to support
its projected sales growth and planned entry into the retail channel in fiscal
2006. Gildan continues to view its Nicaragua site as a strategic long-term
asset for future capacity expansion, and has also purchased additional land in
Honduras for possible future capacity expansion at a site adjacent to its
existing Rio Nance textile facility.

After including the full amount of capital investments made by its yarn-
spinning joint-venture, the Company now expects to generate free cash flow of
approximately U.S. $10 million in fiscal 2005. (Free cash flow is defined as
cash flow from operating activities less cash flow from investing activities).
The next scheduled principal installment of the Company's U.S. senior notes
will be repaid in June 2005, and the Company expects to end the fiscal year
with cash and cash equivalents of approximately U.S. $65 million.

  Stock Split
  -----------



The Board of Directors has approved a 2-for-1 stock split, to be effected in
the form of a stock dividend. The split is applicable to all shareholders of
record on May 20, 2005. On or about May 31, 2005, the Company's registrar and
transfer agent will mail new certificates for the additional shares to all
registered Gildan shareholders as at May 20, 2005. The Company's shares are
expected to commence trading on a post-split basis on May 18, 2005 on the TSX
and on June 1, 2005, or one day after mailing of the share certificates to the
registered shareholders of Gildan, on the NYSE, in accordance with the
respective requirements of these exchanges. The stock split is intended to
increase the liquidity of, and facilitate trading in, Gildan's shares.

  Disclosure of Outstanding Share Data
  ------------------------------------



As of April 29, 2005 there were 29,879,914 Common Shares issued and outstanding
along with 380,048 options outstanding. Effective February 2, 2005, the Company
amended the Articles of Incorporation in order to change each of the issued and
outstanding Class A subordinated voting shares into one newly-created common
share and to remove the Class B multiple voting shares and the Class A
subordinate voting shares, effectively eliminating the dual class voting
structure as approved by a special resolution of the shareholders.

  Profile
  -------



Gildan Activewear is a vertically-integrated manufacturer and marketer of
premium quality branded basic activewear for sale principally in the wholesale
imprinted activewear segment of the Canadian, U.S., European and other
international markets. The Company manufactures and sells premium quality 100%
cotton and 50% cotton/50% polyester T-shirts, placket collar sport shirts and
sweatshirts in a variety of weights, sizes, colours and styles. The Company
sells its products as blanks, which are ultimately decorated with designs and
logos for sale to consumers. Gildan employs more than 7,800 full-time
employees.

Certain statements included in this press release may constitute "forward-
looking statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements. We refer you to the Company's filings with the U.S.
Securities and Exchange Commission and Canadian securities regulatory
authorities for a discussion of the various factors that may affect the
Company's future results.

The Company uses and presents certain Non-GAAP Financial Measures because it
believes such measures provide meaningful information on the Company's
performance and operating results. However, investors should know that such
Non-GAAP Financial Measures have no standardized meaning as prescribed by GAAP
and may not be comparable to similar measures presented by other companies.
Accordingly, they should not be considered in isolation.

Net earnings and earnings per share before the special charge, net earnings and
gross margins adjusted for the impact of the functional currency adjustment on
cost of sales, and free cash flow do not have standardized meaning under
Canadian GAAP and, therefore, are unlikely to be comparable to similar measures
presented by other companies.

  Information for shareholders
  -----------------------------



Gildan Activewear Inc. will hold a conference call to discuss these results
today at 10:00 AM Eastern Time. The conference call can be accessed by dialing
800-261-3417 (Canada & U.S.) or 617-614-3673 (international) and entering
passcode 72793454, or by live sound web cast on Gildan's Internet site
("Investor Relations" section) at the following address: http://www.gildan.com/
. If you are unable to participate in the conference call, a replay will be
available starting that same day at 12:00 PM EDT by dialing 888-286-8010
(Canada & U.S.) or 617-801-6888 (international) and entering passcode 29385316,
until May 12, 2005 at midnight, or by sound web cast on Gildan's Internet site
for 30 days.