Gildan Activewear, the Canadian manufacturer of low-cost apparel basics, gained quite a bit of fashion industry interest over the past year, largely thanks to its recent acquisition of American Apparel and before that, its connection to Kanye West. The rapper made headlines after announcing that he would open 21 pop-up shops across the globe to sell his wildly popular Pablo tour merchandise. He continued to make headlines when the coveted merch – think: $55 ‘I Feel Like Pablo’ t-shirts, $105 ‘True And Legendary’ hoodies, and $325 printed military jackets – hit these stores, as fans were quick to call the rapper out for using Gildan brand products for these relatively pricey wares.
In response to West’s $2-turned-$55 Gildan Yeezy tees, one fan tweeted: “We are here, pissed. The #KanyeWest #Pablo clothing is cheap fabric. What a rip off. Wasted time.” Another added: “As a @kanyewest FAN, it’s really disappointing [that] Pablo merch is printed on such cheap product and then overpriced.”
A source from the Kanye West camp responded to the fan fury, telling the New York Post: “The sourcing has nothing to do with the aesthetics or the value of the line. To talk about the source of the shirt misses the point entirely. It’s like writing an article on how an artist sells a $50 canvas for $1 million. Pointless.”
West likely did not suffer too badly from the fan outrage; he reportedly made upwards of $1 million when he opened a 2-day pop-up in Soho, New York in March. Multiply that by 21 and you might have a number close to what the rapper made from his August pop-up shops, which were staged in Portland, Detroit, San Francisco, Las Vegas, Chicago, Atlanta, and New York City, as well as Singapore, Amsterdam, and Melbourne, among other cities.
And do not forget the merch sold at his concerts, which is also made from Gildan products, and is similarly selling out on each stop of his tour. According to news sources, West sold $780,000 in merch during a single show at Madison Square Garden in September. Some speculative accounting reveals that that number represents roughly 7,800 $108 hoodies, 14,200 $55 tees or some variation thereof.
WHAT ABOUT GILDAN?
So, what about Gildan? How is this publicly traded, Montreal-based company, whose biggest-name clients prior to Yeezy were New Balance and Under Armour, faring as a result of its new-found fame and what we can only assume are frequent large orders for t-shirts, sweatshirts, and hoodies for West’s merch?
Well, according to its most recent financial report, Gildan’s Third Quarter 2016 Results and Updated Guidance for 2016, sales are up, although on a “lower-than-anticipated” basis. For the three months ending on October 2, 2016, Gildan boasted sales of $715 million, an increase of 6 percent compared to the same time frame last year.
This period’s report very well may take into account the merch for West’s 21 global pop-ups, as according to sources close to West, the rapper’s team put the mid-August pop-ups together in just two weeks. “When we pushed play, it was relatively close to the activation,” says Mat Vlasic, CEO of Bravado, the subsidiary of Universal Music Group that produces merchandise and merchandise-related events for artists, and spearheaded the Pablo pop-ups.
On a larger scale, net earnings for the first nine months of 2016 were $272.3 million, compared to $278.5 million from the same time period last year. According to Gildan, “The decline in net earnings and adjusted net earnings was primarily due to increases in income taxes and financial charges, partially offset by higher operating income and adjusted operating income.”
Moreover, Gildan’s outlook for the full year is down. The company’s report states: “Consolidated net sales for the year are now expected to be approximately $2.6 billion compared to the Company's prior guidance of approximately $2.65 billion. The Company continues to project Printwear sales of approximately $1.65 billion [the division into which West’s merch falls] while Branded Apparel sales are now projected to be approximately $960 million compared to the Company's prior guidance of approximately $1.0 billion.”
The report continued: “The updated 2016 full year guidance primarily reflects the lower-than-anticipated results in the third quarter and tempered branded apparel sales expectations in the fourth quarter, in light of current retail market conditions.”
Still yet, Gildan noted that the lower forecast also reflects a delay in shipping product in a new licensed program for a large national chain retailer from the fourth quarter to the first quarter; this may or may not be referring to American Apparel, which Gildan acquired for $66 million earlier this month.
Considering that West’s Saint Pablo tour – which is limited to U.S. and Canadian cities – only began in late August and was slated to run through at least the end of December (before West abruptly cancelled the tour last week), it may be too soon to tell if the rapper’s merch orders are having any significant impact of the t-shirt-maker’s bottom line.
The company – which is being fronted at least in part by country singer Blake Shelton, who has been wearing Gildan garments while currently on a tour of his own (as depicted on Gildan’s various social media pages) – certainly is not boasting about any spikes in sales volume attributable to its new client or its ongoing relationship with the rapper. In fact, Gildan’s latest report, its website, and its social media pages are devoid of any mentions of West, who commonly wears his own Gildan tour merch during shows.
Given that the merch very clearly bears the Gildan tags, it is unlikely that either party is contractually forced to keep quiet about the client/supplier list. However, what we do know about Kardashian/Jenner/West-related matters is that the family is extremely strict when it comes to working with them and subsequently talking about it.
A photographer that has worked closely with West and the Kardashian/Jenner family told TFL that in accordance with a contract she signed prior to commencing work with them, she is barred from disseminating information about their relationship until “100 years after they die.” With that being the furthest end of the spectrum, there is, of course, a chance that Gildan is barred by a similar contract in connection with working with the rapper.
With that in mind, we will have to wait for the company’s fourth quarter and end of the year reports to gauge just how well it did, especially compared to years past. Moreover, will likely be forced to read between the lines as neither party is likely to speak out as to specifics/success of the merch sales. As of now, it does not appear that Gildan’s bottom line has been massively transformed in any way by its new client (and the distribution of Yeezy merch).
While the footprint of West’s merch is certainly enormous in its own sector, it is still probably relatively small when compared to the volume facilitated by Gildan’s other big clients, namely New Balance and Under Armour. West will almost certainly say it is the most successful Art x Music x Fashion x Culture project in the world ever, and with the estimated 8.5 mark up on ‘Pablo’ tees, he sure is profiting quite heavily from this endeavor. It is unclear that this time if Gildan can say the same.