Gildan Activewear may have misrepresented to investors its financial condition as it was not producing enough product to meet revenue projections and was not writing down impaired assets on its balance sheet.
This is a securities fraud class action lawsuit against Gildan Activewear, Inc. and certain of its officers and directors.
Gildan supplies activewear for the wholesale imprinted sportswear market in the United States and Canada, as well as in Europe. Gildan sells T-shirts, sport shirts, and fleece in large quantities to wholesale distributors as undecorated blanks, which are subsequently decorated by screen printers with designs and logos.
The class action lawsuit alleges that, during the Class Period, Gildan Activewear issued a series of materially false and misleading statements concerning Gildan's financial performance and prospects. Specifically, the class action complaint alleges that these statements were materially false and misleading because defendants failed to disclose and/or misrepresented:
(i) that sales of Gildan's activewear were performing below internal expectations as a result of a shortfall in production from its Dominican Republic textile facility;
(ii) that Gildan was failing to timely write down an impairment in the value of its inventories, thereby materially overstating its financial results; and
(iii) as a result of the foregoing, Gildan Activewear had no reasonable basis for their earnings guidance for fiscal 2008 and other positive statements about Gildan Activewear and its business.
Then, on April 29, 2008, Gildan issued a press release announcing that it was reducing its earnings per share guidance for the second quarter and full year of fiscal 2008. Upon this news, shares of Gildan's stock fell $10.99 per share, or 30%, to close at $24.93 per share, on heavy trading volume.
Name (Stock Symbol)
Gildan Activewear, Inc. (GIL)
Gildan Activewear Inc. markets and manufacturers activewear, socks and underwear.
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