Gildan Activewear (NYSE: GIL) saw its stock price surge 5.57% in pre-market trading on Wednesday, following the release of its impressive first-quarter 2025 financial results and optimistic outlook for the year. The company's ability to navigate potential tariff challenges also bolstered investor confidence.

The Canadian apparel manufacturer reported Q1 revenue of $712 million, up 2.3% year-over-year, driven by a robust 9.3% growth in activewear sales. Gildan's gross margin improved by 90 basis points to 31.2%, while adjusted operating income rose to $135 million, or 19% of net sales. The company maintained its 2025 guidance, projecting mid-single-digit revenue growth and adjusted EPS growth in the mid-teen range, despite the challenging macroeconomic environment.

Gildan's stock price was further buoyed by its demonstrated ability to mitigate potential tariff impacts. The company's vertically integrated, low-cost manufacturing model provides significant flexibility in production allocation. As highlighted in a Citi report, Gildan can shift production between its facilities in Bangladesh, Central America, and the United States to optimize costs and avoid tariffs if necessary. This strategic advantage, combined with the use of U.S. cotton and yarn spinning, positions Gildan well to adapt to changing trade policies and maintain its competitive edge in the global apparel market.