Gildan Activewear narrowed its revenue outlook for the year and increased its earnings expectations following a swing to a loss in the second-quarter despite higher profit.

The Canadian apparel company on Thursday updated its full-year 2026 outlook, tightening revenue expectations to the low end of its $6.0 billion to $6.2 billion range due to continuing retail market softness.

However, the company raised its profitability guidance, boosting adjusted operating margin to 21.8% from 20% previously, and adjusted diluted earnings per share to between $4.65 and $4.75 from $4.20 to $4.40 Free cash flow is now expected to reach roughly $1.0 billion from a previous guidance of $850 million fueled by strong integration progress and an anticipated $220 million in U.S. tariff refunds.

For its second quarter, Gildan swung to a net loss of $50 million, or 27 cents a share, from a profit of $137.9 million, or 91 cents a share, in the comparable quarter a year ago.

Adjusted earnings were $1.28 a share. According to FactSet, analysts were expecting $1.12 a share.

Net sales rose to $1.58 billion from $918.5 million, shy of analyst forecasts of a greater rise to $1.61 billion.

Gildan said that was largely due to contributions from its recent HanesBrands acquisition, while partially offset by the costs of integration initiatives aimed at optimizing its manufacturing footprint and accelerate synergy capture.

Wholesale revenue fell 1.5% to $769.4 million, while the combined company supported a jump in retail sales to $813.1 million compared with $137.1 million a year ago.

Gildan completed its acquisition of HanesBrands in late 2025 in a transaction valued at around $4.4 billion, significantly expanding its retail footprint.

"We continue to make excellent progress integrating HanesBrands and capturing synergies, while leveraging the combined strength of our brands, manufacturing network, and commercial capabilities, and investing strategically in innovation," Chief Executive Glenn Chamandy said.