(TSX: GIL)(NYSE: GIL)- Significant Decline in Sales and Gross Margins- Company Expects Improvement in Gross Margins In Second Half of Year butContinuation of Weak Demand- Free Cash Flow Projected to be Positive for Full Fiscal YearGildan Activewear Inc. (TSX: GIL)(NYSE: GIL) today announced itsfinancial results for the second quarter of its 2009 fiscal year, andprovided certain planning and financial modeling assumptions for thesecond half of the fiscal year.Sales and EarningsGildan reported net earnings of U.S. $7.1 million and diluted EPS of U.S.$0.06 for its second fiscal quarter ended April 5, 2009, compared withnet earnings of U.S $42.1 million and diluted EPS of U.S $0.35 in thesecond quarter of fiscal 2008. The reduction in net earnings and EPS wasprimarily due to significantly lower unit sales volumes, as a result ofweak end-use demand and the timing of wholesale distributorreplenishment, and significantly lower gross margins, as a result of theconsumption of higher-cost inventories produced in previous quarters andunfavourable product-mix. Gross margins are projected to improve in thethird and fourth quarters, compared to the second quarter, due to morefavourable manufacturing and raw material costs and more favourableproduct-mix.Net sales in the second quarter of fiscal 2009 amounted to U.S $244.8million, down 16.7% from U.S. $293.8 million in the second quarter oflast year, due primarily to a 21.9% decline in activewear sales includinga 13.9% decrease in unit shipments of activewear Increased market sharepenetration in the U.S.

screenprint channel was more than offset by an18.0% decline in overall industry unit shipments in the channel and thesignificant impact of the Company’s decision to limit its credit exposureto its largest distributor, which has been undertaking a process torestructure its debt financing, as discussed later in this release. Saleswere also negatively impacted by unfavourable activewear product-mix, dueto a lower proportion of sales of high-valued fleece and long-sleeveT-shirts, and an abnormally high proportion of sales of second-qualityproduct as the Company significantly reduced inventories of such productwhich had been manufactured in fiscal 2008. Sales in the Canadian marketdeclined by 45.9% compared to the second quarter of last year, due toweak demand, distributor destocking and the decline in the value of theCanadian dollar. Sales in international markets were negatively impactedby the decline in the value of local currencies compared to the U.S.dollar. Higher unit sales in Western Europe, the U.K., the Asia/Pacificregion and Mexico were offset by the temporary suspension of distributionin Eastern Europe, which had been a growing market in fiscal 2008. Salesof socks were essentially unchanged from the second quarter of fiscal2008 in spite of the elimination of unprofitable sock product-linesduring fiscal 2008. Unit sales of Gildan socks from the Company’s majorretail customers to consumers were higher than the previous year, inspite of weak overall retail market conditions.

The Company believes thatit is well positioned at this time to build on its strong market positionin the sock category and pursue its strategy to achieve furtherpenetration with U.S. mass-market retailers.The table below summarizes data from the S.T.A.R.S. report produced byACNielsen Market Decisions, which tracks unit volume shipments from U.S.wholesale distributors to U.S. However, gross margins are expected to improve in thesecond half of the fiscal year, compared to the second quarter, due tomore favourable manufacturing efficiencies which are reflected ininventory valuations at the end of the second fiscal quarter, includingthe benefit of lower energy and transportation costs, the non-recurrenceof the abnormally high proportion of sales of second-quality merchandisein the second quarter, a higher proportion of sales of fleece andlong-sleeve T-shirts, and the completion of the transition to new sockprivate label brands. In addition, cotton costs in the second half of theyear will decline compared to the second quarter of fiscal 2009, althoughgross margins in the second half of the current fiscal year will not yetreflect the full benefit of the decline in commodity costs, as theCompany had previously committed itself to cotton purchases at highercotton prices. Lower manufacturing and raw material costs in the secondhalf of fiscal 2009, combined with more favourable product-mix, areexpected to positively impact gross margins by over 10%, compared to thesecond quarter, and more than offset the negative impact of assumedfurther downtime and possible further selling price discounting in thesecond half of the year.Selling, general and administrative expenses, after reflecting therecasting of certain items in both years, were U.S $30.9 million in thesecond quarter, compared with U.S $34.6 million in the second quarter offiscal 2008.