Jim:      Distinguishing between the two companies could be very confusing if you do not know what you should be looking at… especially because both stocks are up about 192% from the markets bottom on March 8th… both of them… we just found out that retail sales in May were betters than expected… isn’t that a reason to like both Gildan and Hanes… I mean someone upgraded Jones Apparel, I like that as a nice retailer… shouldn’t we like an apparel maker off of the news… no, wrong… see Gildan may be an apparel maker… but that does not necessarily mean that it has got much of a connection to retail sales or retail in general… this company is not about the consumer.

Gildan gets about 75% of its sales from selling active wear… like t-shirts… but they sell it as blanks, that you can then have designs or logos printed on… like, obviously, unless I printed this, I would not be able to get it… when you look at its customers, it is not retailers who matter… 25% of this business is corporate… companies making their own branded t-shirts to make moral… hey, the beatings will continue until the moral improves… 20% comes from non-profits, another 20% comes from educational institutions, 15% is from sports teams, and then a teeny weenie 10% of this business is from retailers…a fraction of the retail base that Hanes has… which is why we think that Hanes is ultimately cheaper and safer going forward than Gildan.

With companies doing everything that they can to cost costs… I am the axe man, all work and no play makes Jack a very dull boy… anyway, I have trouble believing that this kind of corporate discretionary spending which is really being axed out, cut out, is on the rise… do you think that GM for instance, is going to shell out any money for branded t-shirts… how about beleaguered, sad Citigroup, do you think that they buying a lot of t-shirts there… even healthy companies are trying to slash costs, and that is deadly for Gildan.

One company, a company called Broders, a privately held distributor of blank clothing, caps and bas for promotion, that made up 23% of Gildan’s sales in 2008... was actually teetering on the edge of bankruptcy until mid May… when it was able to stave off Chapter 11 by refinancing about 95% of its debt… even though Broders is still running, it is not buying as much merchandise from Gildan… and in the larger scheme of things, the troubles of this one privately held company, I think, are systematic of the week market to the kind of promotional blank clothing… remember, this is blank clothing… that is Gildan’s bread and butter… this is a much, much worse business than retail.

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