A Canadian t-shirt company which used to boast it operated in a recession-proof industry has revealed it has been hit by a downturn in demand.

Gildan Activewear Inc says high-flying dot-com and telecommunication companies are cutting back on giving away free t-shirts.

Now Gildan is warning that sales and earnings will be lower for the rest of the year and 2002.

They say that a large sector of business has been lost due to dot-com and telecommunication companies tightening their belts.

Gildan, which sells printed T-shirts and other sportswear to distributors, expects to earn 55c a share in its fiscal third quarter, down from a prediction of 70c a share.

Sales for the period are expected to be $10m below the company's previous estimate of $160m.

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