Will Gildan provide additional marketing and promotional support for the brand, and how will those costs be reflected in the company's operating expenses?

Short answer:

The press release does not spell out any concrete plan for additional marketing or promotional spending by Gildan, nor does it describe how any such spending would be booked in the company’s financial statements. Consequently, based on the information that has been made public we cannot definitively say that Gildan will fund extra marketing initiatives for the American Apparel® line, nor can we state exactly how those costs would appear on its income statement.

Why the release is silent on the details

What typically happens in a deal of this nature (general industry practice, not disclosed by Gildan)

1. Marketing support – In many exclusive‑distribution arrangements the brand owner (here, Gildan) often funds or co‑funds marketing programs to protect and grow the brand’s equity. This can include:

   • National advertising (digital, print, TV, social media)
     
   • In‑store merchandising and point‑of‑sale displays
     
   • Trade‑show participation and retailer incentives
     
   • Cooperative marketing allowances paid to the distributor (S&S)
     

2. Expense classification – When Gildan does incur such costs, they are normally recorded in selling, general and administrative expenses (SG&A).

   • Advertising & promotion is a line item within SG&A.
     
   • If the company treats the spend as a “marketing allowance” payable to the distributor, it would still be booked as SG&A (often shown as “marketing expense” or “advertising expense”).
     
   • No portion of the cost would be capitalized (i.e., it would not appear in cost of goods sold or as an intangible asset) unless the spend meets a very specific criteria for capitalization (e.g., creation of a long‑lived brand asset that can be reliably measured), which is rare for routine promotional activities.

3. Impact on operating expenses – Assuming Gildan elects to add marketing spend:

   • Operating margin would be reduced by the amount of the new SG&A outlay, all else equal.
     
   • The effect on earnings before interest, taxes, depreciation, and amortization (EBITDA) would be a one‑for‑one reduction, because EBITDA subtracts SG&A from gross profit.
     
   • Analysts typically watch the SG&A/Revenue ratio; a modest increase is acceptable if it translates into higher top‑line growth from the partnership.

What investors can reasonably expect until more information is released

• No guarantee of additional spend: The language “continue strengthening brand awareness” is aspirational and does not constitute a contractual commitment to a specific marketing budget.
  
• Potential for future disclosures: Gildan’s quarterly earnings releases, MD&A sections, or a later press statement may give more granularity (e.g., “we have allocated $X million to American Apparel® marketing in FY2025”). Until such details appear, any estimate would be speculative.
  
• Monitoring SG&A trends: The most reliable way to see whether Gildan is funding new promotional activity is to compare SG&A levels (and SG&A as a % of revenue) before and after the August 2025 announcement in the company’s subsequent 10‑Q and 10‑K filings.

Bottom line

• Will Gildan provide additional marketing and promotional support? The current press release does not confirm that it will; it only states an intention to “strengthen brand awareness.”
  
• How would those costs be reflected? If Gildan does incur such costs, they would almost certainly be recorded under selling, general and administrative expenses (SG&A), most likely as a line‑item “advertising/marketing expense,” thereby reducing operating income and EBITDA proportionally.

Investors should keep an eye on Gildan’s upcoming financial disclosures for any explicit mention of marketing budgets or expense line‑item changes related to the American Apparel® partnership.