Mad Money Spotlight: Cramer Slogs Gildan

The T-shirts from Hanesbrands(HBI) and Gildan Activeware(GIL) are practically indistinguishable from each other -- but the companies sure aren't.

Both companies are up almost 200% from their bottoms earlier this year, Jim Cramer said during his "Mad Money" segment on Thursday, but he insists Gildan is still a sell.

Gildan derives 75% of its sales from activeware and, unlike Hanes, it sells products as blanks for custom printing. Its biggest clients, about 25%, are corporations making logoed tees to boost employee morale. And, well, there isn't much pride (or money) at companies like General Motors.

Broder, a wholesale distributor of t-shirts, sport shirts and other corporate apparel, made up 23% of Gildan's sales in 2008. But this company was teetering on edge of bankruptcy until mid-May, and surely has cut back on its purchases from Gildan.

Retail sales in May were better than expected, up .5%, the Commerce Department reported yesterday. But this doesn't mean Gildan is profiting.

The company derives a measly 10% of its sales from retail, a fraction of Hanes' retail business, which is why Cramer said Hanes is the safer bet going forward.

Unlike Hanes, Gildan also is vertically integrated, meaning it has high fixed costs. As sales decline, so do margins, which have already fallen from 17% to just 3% in its most recent quarter. And Gildan has little fat to cut to boost earnings to offset sinking sales.