Gildan Activewear, a leading supplier of branded basic family apparel, is expanding its reach in women’s appeal by acquiring a Canadian hosiery manufacturer Doris for at least $101.4 million.

According to the company, the deal is expected to close in July. The sale price could rise by up to another $9.2 million if certain revenue growth targets are achieved.

Gildan spokeswoman Stephanie Gaucher commented on the acquisition: “It positions Gildan to increase its penetration in the basic women’s apparel markets and also positions our company for entry into the ladies intimates’ category. It further broadens the company’s retail distribution network in the United States due to Doris’ strong presence in the food and drug channel.”

Legwear and shapewear

Doris is the third largest marketer of branded ladies legwear in North America and the market leader in Canada, with products sold throughout all retail channels of distribution.

Its company owned brands include Secret, the Silks brand, and TherapyPlus, which provides therapeutic legwear solutions for medical conditions and everyday activities.

Doris also markets its brands including Kushyfoot and TherapyPlus in the US. 

Doris, as well as Gildan, are based in Montreal, where Doris has a manufacturing plant and a distribution centre.

Value creation

Taposh Bari, an analyst with Goldman Sachs, said the deal resembles purchase of Maidenform Brands by Hanesbrands, Gildan’s major competitor, in 2013.

Hanesbrands is said to have spent $585 million in cash to gain access to Maidenform’s basic apparel brands and to wring cost savings from shifting Maidenform’s production from third-party vendors to Hanesbrands’ supply chain in Asia, Central America and the Caribbean.

“We see consolidation as an on-going theme in this sector as organic growth slows and value creation from vertical integration, scale and a lower tax rate become more evident. We see Hanesbrands and Gildan as beneficiaries of this trend,” Bari explained.

Additional investment

Jim Duffy, an analyst with Stifel Nicolaus, believes that the Gildan purchase is in line with expectations for acquisitive growth as a complement to its organic growth. “We are encouraged by the synergies likely to come from Doris’ established sales platform in Canada. Sheer hosiery, historically, has been a competitive and somewhat volatile category,” he said.

Gildan plans to invest an additional $30 million as part of the Mocksville project, raising the investment total to $142 million. That is expected to enable Gildan to purchase a larger parcel of land and increase the square footage of the plant by 50,000 square feet to 700,000 square feet, as well as buy additional new spinning equipment.

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