Note: This is an earnings call transcript. Content may contain errors.

Image source: The Motley Fool.

DATE

Oct. 29, 2025, at 8:30 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Glenn J. Chamandy
  • Chief Financial Officer — Luca Barile
  • President, Sales, Marketing and Distribution — Chuck Ward
  • Vice President, Investor Relations and Corporate Communications — Jessy Hayem

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

  • Retailers exercised tighter inventory management and faced delays in floor sets, which led to weakness in the underwear and innerwear business for the quarter.
  • The overall wholesale market remained down by "low single digits" year-over-year. Glenn J. Chamandy clarified, "it hasn't really improved and hasn't gotten any worse. So it's more stable relative to Q2, but still negative year over year."

TAKEAWAYS

  • Free Cash Flow -- Generated $200 million in free cash flow, in line with internal expectations. Full-year fiscal 2025 guidance was revised lower due to higher working capital needs and Hanesbrands transaction costs. (Fiscal 2025 period ends Dec. 31, 2025.)
  • Operating Margin -- Operating margin guidance increased to a 70 basis point year-over-year improvement for this year, above the prior 50 basis point forecast, driven by lower manufacturing costs and continued cost control in SG&A.
  • Gross Margin -- Improvement was attributed to sustained cost reductions from manufacturing optimization, with some favorable pricing impact.
  • Capital Expenditures -- CapEx was lower than anticipated for the year as efficiency investments in Bangladesh and Central America are leveraged; additional Bangladesh expansion will be achieved within existing space before considering a second facility.
  • Brand and Product Growth -- Comfort Colors brand and fleece product categories performed well; new activewear programs and national account growth contributed positively to sales.
  • Inventory and Tariffs -- Tariff-related costs remained embedded in inventory, impacting working capital, while the company is actively reviewing supply chain and product innovation in high-tariff categories such as 100% polyester.
  • Wholesale Market Trend -- The wholesale market was described as "down low single digits" year-over-year in Q2, with similar conditions continuing in Q3, according to Glenn J. Chamandy, with projected similar conditions for Q4.
  • Hanesbrands Acquisition -- No share repurchases are planned for the remainder of the year, and integration planning is underway to drive cost and margin benefits post-acquisition.

SUMMARY

Gildan Activewear (GIL 2.41%) generated $200 million in free cash flow, revising its full-year guidance lower to reflect timing of working capital and acquisition costs tied to Hanesbrands. Management raised its operating margin guidance for the year, citing foundational cost controls and manufacturing efficiencies -- especially from expanding Bangladesh and Central America capacity -- and expects further improvement as integration with Hanesbrands progresses. The company reported growth in key brands and categories, notably benefiting from new activewear programs, while also maintaining lower-than-expected capital expenditures by maximizing existing plant capacity. Although the wholesale market remained down by low single digits year-over-year, operational discipline and targeted investments positioned the company to pursue additional margin expansion and cost synergies in fiscal 2026 and beyond.

  • Glenn J. Chamandy noted, "increased capacity that we can get out of Bangladesh right now doesn't preclude us from putting up the second facility," confirming future optionality for further expansion as integration plans solidify.
  • The company is prioritizing manufacturing scale and cost optimization, with management highlighting a 25% cost advantage in Bangladesh operations over Central America, even with tariffs, supporting long-term margin targets for the combined entity post-acquisition.
  • Management explicitly cited product innovation investments -- such as in soft cotton technology -- are being used to offset cost inflation and support operating margin expansion.
  • Operating assumptions for the remainder of 2025 include no further share repurchases, sustained adjusted effective tax rates, and ongoing benefits from government incentives in jurisdictions where Gildan operates.

INDUSTRY GLOSSARY

  • Floor Set: A scheduled rollout or refresh of new merchandise displays in retail stores, typically influencing periodic sales timing and inventory levels.
  • POS (Point of Sale): In this context, refers to aggregated retail sales as measured at the register or online transaction point, representing consumer demand rather than shipments into the channel.
  • SG&A: Selling, General, and Administrative expenses -- overhead costs not directly tied to manufacturing.
  • CapEx: Capital expenditures, representing investments in physical assets or major upgrades/capacity expansions.

Full Conference Call Transcript

Glenn Chamandy: Thank you, Jessy, and good morning, everyone. We're pleased with our third quarter results as we continue to drive profitable growth, especially in a macroeconomic backdrop, which remains fluid. We saw strong net sales growth of 5.4% in Activewear and adjusted operating margins of 23.2%, which allowed us to deliver record adjusted diluted EPS of $1 this quarter, an increase of 17.6% versus the same period last year. These are record-setting third quarter results, which once again showcased the effectiveness of our Gildan sustainable growth strategy in driving strong financial performance.

Our sales in the distributor channel remain healthy, and we're seeing sustained momentum in our national account customers, which is supported by strong overall competitive positioning. We continue to drive growth in key categories. We're very pleased that our innovation pipeline continues to create excitement, and we have now introduced new brand offerings such as ALLPRO and Champion. Furthermore, our Comfort Colors brand continues to perform very well. This year, the brand is actually celebrating its 50th anniversary. A great milestone for Comfort Colors whose pigment dyed shirts are redefining comfort and style. They're crafted from 100% rings spun cotton, grown and harvested in the U.S. using a pigment pure technology, which helps to reduce water and energy and shortens processing time.

So as we turn the page to another successful quarter of execution, we are narrowing our adjusted diluted EPS guidance to a range of $3.45 to $3.51, and also updating our full year adjusted operating margins, CapEx, free cash flow guidance. Luca will detail this in a moment. We believe that this is an exciting pivotal moment for Gildan, and we're enthusiastic about the next phase of our growth journey.

We're delivering constant execution of our strategic priorities. We're capitalizing on the largest innovation pipeline in the company's history. And now we're focused on planning the integration of the proposed acquisition of HanesBrands, which will broaden our portfolio of retail presence as we look to drive meaningful run rate synergies of at least $200 million by leveraging our best-in-class large-scale, low-cost vertically integrated manufacturing network.

We continue to expect the transaction to close late this year or early 2026. As you can expect, we have put in place an integration team that have begun planning for this combination. At this point, there is no further commentary that we'll be positioned to provide for the proposed transaction. In conclusion, we continue to execute from a position of strength. We have a solid foundation. We're focusing on our GSG strategy with our strong competitive positioning, all of which is putting us in a great position to execute on the eventual combination with HanesBrands and ultimately drive long-term shareholder value. I look forward to answering your questions after our formal remarks, and now I'll turn it over to Luca for a financial review.

Luca Barile: Thank you, Glenn. Good morning, everyone, and thank you for joining us today to discuss our third quarter results. Let me start with the specifics of the quarter, then turn to our 2025 outlook and guidance. First, the quarterly results. We reported third quarter sales of $911 million, up 2.2% year-over-year, in line with previously provided guidance of low single-digit growth. The 5.4% increase in Activewear sales was driven by favorable product mix and higher net prices.

As Glenn mentioned, we continue to drive growth in key categories and are experiencing robust demand for Comfort Colors while supplementing our portfolio with the addition of ALLPRO and Champion. Sales to North American distributors were solid, complemented by sustained momentum at our national account customers, driven by our strong overall competitive positioning. Sales in the hosiery and underwear category were down 22% versus last year, which reflect, as expected, a timing shift of shipments into the fourth quarter and to a lesser extent, unfavorable mix as the category experienced continued broader market weakness during the quarter.

Turning to international markets. Sales were down by $4 million or down 6.1% year-over-year, primarily reflecting ongoing demand softness across markets. We don't typically spend time on our year-to-date results, but just a brief comment that on a year-to-date basis, our consolidated revenue growth is at mid-single digits, excluding the impact of the exit of the Under Armour business in 2024, setting us up well for the full year.

Shifting to margins for the quarter. Our gross margin was 33.7%, a 250 basis point improvement over the prior year, primarily due to lower manufacturing costs and favorable pricing, which reflect price increases implemented to offset the initial impact from tariffs. To a lesser extent, we also benefited from lower raw material costs. SG&A expenses were $95 million versus $84 million last year. Excluding charges related to the proxy contest and leadership changes and related matters, which were almost entirely incurred in the prior year, adjusted SG&A were still $95 million or 10.4% of sales compared to $78 million or 8.8% of sales in the same quarter last year, reflecting higher variable compensation and IT-related general and administrative expenses.

As we bring these elements together and adjusting for restructuring and acquisition-related costs primarily related to the proposed HanesBrands acquisition as well as the costs related to the proxy contest and leadership changes and related matters, which were almost all entirely incurred in the prior year. We generated adjusted operating income of $212 million, up $12 million, representing a record 23.2% of net sales. This reflects an 80 basis point improvement year-over-year, which came in ahead of guidance we provided.

Net financial expenses of $44 million were up $13 million over the prior year due primarily to fees related to the committed financing that we obtained for the proposed HanesBrands acquisition and due to generally higher borrowing levels. Furthermore, in connection with the proposed acquisition, as you may have seen, we announced on September 23, a private placement offering of USD 1.2 billion aggregate principal amount of senior unsecured notes across 2 series. The proceeds from this offering will be used to fund the proposed acquisition of HanesBrands, refinance its debt and cover related transaction costs. Taking into account all these factors and adjusting for restructuring and other costs and the financing fees in connection with the proposed HanesBrands acquisition, we generated record adjusted diluted EPS of $1, up 17.6% compared to $0.85 in the comparable period.

Now turning to cash flow and balance sheet items for the first 9 months of 2025. Operating cash flow was $270 million compared to $291 million last year, primarily reflecting higher working capital investments. After accounting for CapEx of $82 million, we generated approximately $189 million in free cash flow in the first 9 months of 2025, of which $200 million was generated in the third quarter. During the first 9 months of the year, we returned $286 million in capital to shareholders, including $102 million in dividends and repurchased about 3.8 million shares under our NCIB program. Finally, we ended this quarter with net debt of about $1.7 billion and at a leverage ratio of 2x net debt to trailing 12 months adjusted EBITDA, at the midpoint of our targeted range of 1.5x to 2.5x.

Now turning to our strategy and outlook. As Glenn highlighted earlier, we are pleased with the team's continued execution as we approach the end of a very solid year. We continue to tap into the largest innovation pipeline in the company's history with more product launches to come in 2025 and into 2026. Now turning to the outlook. We remain focused on operational agility and committed to executing on our GSG strategy in order to drive strong financial performance as we navigate a fluid macroeconomic environment.

We are updating our 2025 guidance as follows and expect revenue growth for the full year to be up mid-single digits, in line with previous guidance. Full year adjusted operating margin to increase approximately 70 basis points compared to previous guidance of up approximately 50 basis points. Our CapEx to come in at approximately 4% of sales compared to previous guidance of 5% of sales. Adjusted diluted EPS to be in the range of $3.45 to $3.51, which is up approximately 15% and 17% year-over-year compared to our previous guidance of $3.40 to $3.56; and free cash flow to now approximately $400 million compared to our previous guidance of above $450 million.

The assumptions underpinning this outlook are the following: Firstly, we continue to reflect the impact of tariffs currently in place in conjunction with mitigation initiatives available to us, including pricing and our ability to leverage our flexible business model as a low-cost, vertically integrated manufacturer. The higher tariffs are also embedded in our inventory costs. Furthermore, the outlook continues to reflect growth in key product categories, driven by recently introduced innovation, the favorable impact from new program launches and market share gains and the various incentives from jurisdictions where we operate.

We have assumed no share repurchases for the remainder of 2025, as indicated at the time of the announcement of the proposed Hanesbrands acquisition. We've taken into account acquisition-related costs incurred thus far and we anticipate that our adjusted effective tax rate for 2025 will remain at a similar level to what we saw for the full year in 2024. Finally, we've assumed no meaningful deterioration from the current market conditions including the pricing and inflationary environment, and the absence of a significant shift in labor conditions or the competitive environment.

So in summary, we are pleased with the quarter. And we remain confident in our ability to deliver continued strong financial performance as we look ahead and get ready to welcome Hanesbrands.

Jessy Hayem: Thank you, Luca. This concludes our prepared remarks and now we'll begin taking your questions. As usual, before moving to the Q and A session, I would like to remind you to limit your questions to two Jeannie, can you please begin the Q and A session?

Operator: Thank you. And your first question comes from Paul Lejuez with Citigroup. Please go ahead.

Paul Lejuez: Couple of questions. One, can you just talk a little bit more about the weakness in the underwear business? Where you think that market share might be going? Maybe you can quantify how much was the shift versus overall market weakness? And what's your view on when that business stabilizes? And then second, just curious what you're seeing at point of sale overall. Maybe if could talk to pockets of strength and weakness at point of sale. Thank you.

Chuck Ward: Good morning, Paul. It's Chuck. Thank you for the questions. Couple quick things, I guess. First, on the underwear and innerwear business. What we're seeing innerwear business was impacted by a few things for the quarter. There continues to be some delays in some floor sets by a large retailer. So we're continuing to face that bit. Also, some of it is retailers managing inventory investments and balances due to the impacts, if you think, of what they now have impacts of tariffs in their inventory and some cost cautiousness overall. We did see during Q3, the retailers starting to manage inventory a little tighter.

And also, we talked previously about some ongoing product and program resets, that are happening within the space. With some customers. So all those things kinda drove the quarter results that you see here. I think as we think about going forward, we expect to see a return in innerwear of growth in Q4. So we expect Q4 to be back to a growth perspective. Overall, on POS and what we're seeing in the market, I mean, what we're seeing is a stable market. We have seen it stabilize over the year. We think that, we'll continue to see that through Q4 as well.

And so I think if you think about categories and how they're performing, I mean, we're seeing strong performance, obviously, with our Comfort Colors brand. We're continuing to see very large growth in net. Fleece has performed well. Glenn mentioned in his comments about some new activewear programs and national account growth. That we're seeing as well. So we're capitalizing on those things as we go. And then, you know, obviously, we feel good about our brand portfolio and where we are to address the market going forward.

Paul Lejuez: Got it. When you say stable market, are you saying stable to last year, like POS is flat to last year? Or stable at a low single digit or mid single digit rate?

Chuck Ward: Yeah. More in line with Q2, what we were talking about in Q2. The market's kind of been stable at that same rate going forward.

Paul Lejuez: Got it. Thank you.

Operator: Your next question comes from the line of Chris Lee with Desjardins. Please go ahead.

Chris Lee: Hi, good morning everyone. Just maybe a first question on your guidance update. On your free cash flow guidance, you are guiding a little bit lower despite lower CapEx Looks like it's mostly coming from higher working capital investment. Can you please elaborate on what's driving the change in the guidance for this year? Thank you.

Luca Barile: Yes, sure. Thank you, Chris, for your question. So look, from a free cash flow perspective, we're actually so a few things. One, very good free cash flow performance in the quarter. We generated $200 million which is right in line with our internal expectations. And the revision to the guidance from a free cash flow perspective, there's a few things that drive that. One is the just taking into account the transaction costs incurred to date with the proposed Hanesbrands acquisition. The second is there's a bit of timing with respect to working capital.

I'd reiterate that our view on working capital is percentage of sales is really to be around 37% to 38% We'll get there as we move into 2026. And right now, there's also some tariff costs that incurred in our inventory. So that's really the main drivers From a cash flow generation perspective, that we're still generating healthy elements of free cash flow. That's really driven by the fact that we have really strong margin performance coming through, and that's expected to continue into next year.

Chris Lee: Great. Okay. That's very helpful. And then maybe just another one on the guidance update. The operating margin, if expected to increase by 70 basis points this year. As we look out into next year, what are some of the key puts and takes And maybe directionally speaking, do you think 70 basis point improvement again next year is achievable? Thank you.

Luca Barile: Well, starting with the guidance for this year, the one thing that we're very pleased with, and that is starts with the performance that we've seen sort of quarter over quarter and specifically in the third quarter. Is strong margin performance. And the strong margin performance comes from is twofold. One, from strong gross margin performance but also really good cost control around SG and A.

And the reason why we've upped the guidance there in terms of up to 70 basis points improvement year over year versus the 50 that we previously guided to is because the elements that we control that have been driving the margin expansion are things that are foundational to the way the company is running today and will continue to run. Those things are really embedded in the ramp up of Bangladesh right? Our investment in Bangladesh and the cost differential that's bringing us is contributing to that margin. That's expected to continue. The investments we made into our yarn operations, our optimization of our yarn footprint And those costs are coming through. Those will continue.

The optimization of our Central American capacity and quite frankly overall, our network overall that's coming through. So there are elements that when you take a look at gross margin, the third quarter, we do have some impact from favorable pricing. There's a little bit of timing versus Q4. But the way to think about the margin, it's strong, and it's sustained and it's driven by things that we control and that are foundational to the business model. So that's what how I would think about heading into next year.

Chris Lee: Okay, great. Thanks, Luca. All the best.

Operator: Your next question comes from the line of Jay Sole with UBS. Please go ahead.

Jay Daniel Sole: Great. Thank you so much. Two part question for me. First is just on the fleece business. Glenn, if you just talk about how the fleece business trended maybe in September, if the weather is a little warmer and maybe what you've seen in October as the weather has gotten a little cooler? Just how inventory in that business is looking overall and how demand is looking And then secondly, with all the tariffs now, it's been a couple of quarters since April 2. What kind of conversations are you having with companies?

What kind of opportunity do you see maybe to capture some new business from companies maybe looking to move some of their production out of Asia maybe to your factories with your company? Whether it's in Bangladesh or in Central America? Thanks so much.

Glenn J. Chamandy: Okay. Well, would say, look, if Fleece is still performing well for us. You know, we're in a good position with fleece this year. It's really early. I mean, season really only starts kicking off. Like, you know, we ship we ship a lot of our fleece and, you know, the end of Q2, Q3, basically, and then the season really sell through period starts now and, you know, moves into the fall and winter, really. So, you know, I think we're, you know, it's early days in terms of weather, but so far, the sales are meeting our expectations, I would say, in terms of fleece so far for this year.

Regarding tariffs, I would say to you that look, there's a lot of uncertainty in the market today. And I think that we're seeing a lot of people looking to orient their supply chain, But at the same time, there's a little bit of you know, I would say, hesitation because, you know, people don't understand are tariffs off the tariffs are on. They're making a deal. They're not making a deal. They're going to court. They're not going to court. So, you know, shifting your supply chain is never something you want to do in a knee-jerk type of reaction.

So and even ourselves, to be honest with you, there's ways for us in our own manufacturing to further optimize, I would say, our supply chain relative to the way we're set up. But we're sort of waiting to see how all of these things materialize. So overall, I would say that there's definitely gonna be a rethink in terms of how people are trying to reorient into their supply chain. And there's also gonna be specific areas where I think the opportunity is going to, you know, allow us to look at other product categories.

So for example, if you look at the 100% polyester product category, that's an area where the tariffs are the highest and duties are the highest. So and that's an area that we have, you know, in our Rio Nance 6 facility, for example, has got a lot of capabilities of producing polyester. So and there's been trade legislation changes in that category. So we think that's something that we can capitalize on, and that's probably one of the areas where we have actually the lowest, you know, market penetration. So we're working quickly now on building product innovation, things that we're doing to look at that category.

And one of our brands, which is All Pro, I mean, it's really focusing on all polyester type products and as well as a lot of the big brands that are looking maybe potentially nearshore. Those are that's a category which is really important to them. So overall, look. We think there's gonna be an opportunity. I think it still has to come to fruition, I would say, as we move into, the future. But I think we're well-positioned with our manufacturing footprint to take advantage of any type of opportunity.

Jay Daniel Sole: Got it. Thank you so much.

Operator: Your next question comes from the line of Vishal Shreedhar with National Bank. Please go ahead.

Vishal Shreedhar: Hi, thanks for taking my questions. Luca, when you mentioned that the market was stable, my understanding was that the market was I'm I'm sorry, but the wholesale market was under pressure at least you know, for the last several quarters. So were you talking on a volume basis or on a on a sales basis? And are you including national accounts in that as well? When you're saying it's stable?

Glenn J. Chamandy: K. When we look at the market, we look at the whole market in tiring. I would say to you that the Q3 was similar to Q2. And what we said in Q2, it was down low single digits, basically. So we're seeing the same type of, you know, comps as we move into Q3. So it hasn't really improved and hasn't gotten any worse. So it's more stable relative to Q2, but still negative year over year. You know, obviously, we're doing well in the market because of our you know, our soft cotton technology, our comfort colors. You know, AA basically is continuing to grow. Our launch of our All Pro and Champion.

And remember that, you know, of our sales growth this year in 2025 was projected coming from new programs. Our fleeces in retail, a major program we had is doing very well. So all those things are driving the sales growth for us to have our mid single digit growth for the full year, which we're on track for. But I would say that the market, it was down probably low to mid in Q1. We said low in Q2, and it's probably in the same level Q3. And we're expecting that type of scenario in Q4 in our assumption.

Vishal Shreedhar: Okay. And that's on a sales basis. Right? Not on a unit's basis.

Glenn J. Chamandy: Yeah.

Vishal Shreedhar: Okay. Okay. And with respect to the gross margin, and I know you chatted to this a little bit earlier, but it improved quite a bit sequentially. Is that mainly related to the manufacturing initiatives, or was there pricing in there as well?

Luca Barile: Yeah, Vishal. So for again, the gross margin was strong in the quarter. It's a combination of things. But really what's driving the foundation of the margin at the end of the day is the contribution of the lower manufacturing costs. There is some impact from pricing, but really the lower manufacturing cost is what's foundational. And that is what's going to carry forward not only into the fourth quarter, but that's foundational to the business as we move into next year.

Glenn J. Chamandy: Yeah. And then, Don, maybe just add one thing to that, I would say is that look at the fundamentals of our strategy of optimizing our manufacturing and scaling and generating scale in our operations is gonna continue as we move into 2026 because you know, we've expanded in Central America like we said this year, which, you know, we've added another 10% capacity in our facilities in our four walls at a limited and the CapEx is coming even below our expectations. So as we leverage that CapEx as we move into 2026, obviously, that's gonna continue to help us with you know, additional cost reductions and margin expansion as we continue to optimize our facilities.

We're actually in the process now of looking to expand within our Bangladeshi facility, within the four walls of that well. And, you know, we believe that we actually can expand that facility by probably another 50% as we look at the four walls of that building by utilizing some space that we have within our park, and allowing us to, you know, to drive additional capacity. So these are all the things that's built into Gildan DNA. It's looking at ways really to optimize our manufacturing, particularly as we look at our overall planning as we move into 2026. And bringing on Hanes. And as far as we continue to plan our integration strategy.

So scale is gonna be a key driver of continued margin expansion, and we think we're well positioned to continue to grow our margins as we move forward. And lower our costs.

Vishal Shreedhar: Thank you.

Brian Morrison: Hey. Good morning. Glenn, I want to follow-up with that what you just talked about. So how much capacity you talked about the increase in Bangladesh and in Honduras throughput. How much available capacity in dollars is within your existing infrastructure It sounds like there's another $200 million to $250 million in Bangladesh one. And what is your view per go ahead for a second facility at Bangladesh I know you already have some of the pieces already in place there.

Glenn J. Chamandy: Well, I think two things. One, look. It will articulate some of our plans as we move into, Q1 and report because we'll have good visibility on, you know, our total integration plan with the HPI. So I think that will sort of give you a little bit context. But the increased capacity that we can get out of Bangladesh right now doesn't preclude us from putting up the second facility. So we still have that optionality. What we're gonna do is we have space available to us in Bangladesh where we can add, you know, additional knitting equipment, and we're putting in some more dyeing and finishing equipment in the facility.

And in the existing facility will allow us to get the first level of expansion And then we'll also, obviously, as we move forward, evaluate Phase II. Phase II would be a much bigger, longer project. It's going to take twelve to eighteen months to develop. So that's something that will be down the road. But trying to get incremental capacity and also looking to optimize our cost structure and reduce the amount of capital we gotta spend. That's our first priority. You know, as we bring on HBI.

So with all of that and looking at the ecosystem of, you know, what they're doing, the products, the mix, and all the different things, you know, we're building I think, a cohesive integration plan that ultimately is gonna continue to lower our costs and bring us scale, which is what we called out before, But more importantly, we think that there's a lot of room in terms of the margin improvement and operating margin improvement on the other side because we don't we believe that, you know, Haines should be operating in the same type of operating margins as Gildan does today. So that's our long term goal, let's say, example, as we as we drive into the future.

So everything being equal, I think we're in a very good position. We're very comfortable with our positioning, and we're gonna continue to leverage our best in class vertically integrated large scale manufacturing as we build our plans into '26, '27, and '28.

Brian Morrison: And, Glenn, to follow-up, how long would it take you to expand Bangladesh one And have tariffs on Bangladesh made you alter any of your logistics or supply chain in order to optimize your cost structure?

Glenn J. Chamandy: I would say to look at that even with tariffs, Bangladesh is very competitive. And what we said before is that it had a 25% cost advantage relative what we're doing in Central America and the products that we're producing. So tariff impact with US cotton, obviously, is a lot lower than that. And then as we continue to scale the thing up and lower our cost, therefore, there will be offsetting some of that tariff cost even further. So that's all part of the strategy, how we're gonna continue to drive efficiencies in our system. So look at, we think that we're in a good place. You know, we're continued.

We feel comfortable, and you can see it's pulling through in our operating margin expansion this year. And all we're saying to you is that look, we got further room to continue to expand our manufacturing footprint, reduce our costs, and make us more competitive. And continue to innovate our products.

And don't forget, one of the things that you could take into account is that even though that we've seen margin expansion, preclude us that the fact that we've reinvested significantly in our product and innovation because the things that we're doing in our soft cotton technology, for example, have you know, we're putting more value into these garments, so more cost in terms of you know, like for like type thing. But the fact is because we're optimizing we're offsetting those costs with lower manufacturing costs, which is in improving our operating margin. So it's a win-win scenario in our ecosystem.

And by bringing in I think as we move forward into '26 and taking in the big volume that we have from Hanes, that's when we're gonna continue to allow us to scale up even further, and we're really excited about the opportunity.

Brian Morrison: Thanks very much. Good luck.