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File photo of Glenn Chamandy, CEO of Gildan.

Andre Pichette/The Globe and Mail

During the financial crisis, as the bottom fell out of garment maker Gildan Activewear Inc.'s share price, Glenn Chamandy made a bet of about $23-million (U.S.) that the doubters were wrong about his struggling company.

The company's chief executive bought millions of shares during the midst of the turmoil in December, 2008 and February, 2009 – "a time when the stock market was at its nadir and people thought the world was going to end," said chief financial officer Laurence Sellyn.

That show of faith has turned into a windfall. With Gildan expected to put up strong numbers again this fall, the company said Mr. Chamandy will sell 2.75 million shares over a period of up to two years. At Wednesday's closing price, he stands to pocket nearly $60-million on the investment he made during the crisis.

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The CEO's big score illustrates the turnaround at the Montreal company, which is best known for cheap, blank t-shirts it sells through wholesalers.

During the crisis, Gildan's biggest wholesale customer narrowly avoided filing for Chapter 11 bankruptcy protection.

The company also had production problems at its Dominican Republic plant, and then shipments to distributors collapsed as the recession hit.

Those problems are forgotten now, and the stock has risen from $7.44 (Canadian) in 2009 to $30.40.

Mr. Chamandy's share sale will be handled by a U.S. financial institution at predetermined volume and price levels, and the CEO will have no discretion over when the transactions occur.

The sale will leave him with about 7 million shares, worth about $215-million at Wednesday's close. "He considers that to be his long-term core position" in Gildan stock, Mr. Sellyn said.

Mr. Chamandy previously sold about 3.6 million shares in 2007.

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Investors reacted to his sale, knocking 3 per cent off Gildan's stock price Wednesday.

However, analysts noted that Mr. Chamandy has directed that no stock can be sold until after the release in late November of fiscal year-end numbers and the company's earnings guidance for next year, indicating there are no negative surprises to come before then.

"I'd be uncomfortable if he had the approval to sell now," ahead of the release, said Kenric Tighe, an analyst with Raymond James in Toronto.

It has been a choppy year for Gildan, a dominant low-cost wholesale supplier of t-shirts, fleece wear, socks and underwear that has been expanding on to mass merchant retail shelves following in recent years.

In December, Gildan warned it would report its first quarterly loss in 10 years after being caught out when the price of cotton spiked, then plummeted last year.

The stock shed 33 per cent of its value in one day.

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Gildan was forced to offer rebates to customers to get its expensive product off its hands, which has affected earnings this year.

Analysts now expect Gildan to earn about $1.30 per share this fiscal year, down from $2.01 last year.

The fourth quarter will be pivotal as analysts are expecting a return to form.

Mr. Tighe said cotton prices seem to be under control, distributors and retailers are expecting a steady back-to-school season and Gildan's manufacturing operations appear to be humming along.

"Can I reasonably conclude there is something here to be spooked by? The answer is no."

Analysts are expecting Gildan to report earnings of between $2.40 and $2.50 a share next year.

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"We believe that Gildan's [earnings] power is higher than what is currently reflected" in street expectations for next year," said National Bank Financial analyst Vishal Shreedhar.

"As a result, it is no surprise to us that the CEO is waiting until after he issues ... guidance to sell."

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