Q2 2025 Gildan Activewear Inc Earnings Call

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Junine: Ladies and gentlemen, thank you for standing by and welcome to Gildan Activewear's 2025 second quarter earnings conference call. Please be advised that today's conference is being recorded. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star on your touch-tone phone, and to withdraw your question, please press star one again. I would now like to hand the conference over to Jessy Hayem, Senior Vice President, Head of Investor Relations and Global Communication. Ma'am, please go ahead.

Ladies and gentlemen, thank you for standing by and welcome to Gilden Activewear plenty.

2025 second quarter earnings Conference call. Please be advised that today's conference is being recorded.

After todays presentation, there will be an opportunity to ask questions.

To ask a question you May press star on your Touchtone phone and to withdraw your question. Please press star one again.

I would now like to hand, the conference over to Jessie Han Senior Vice President head of Investor Relations and Global Communications. Please go ahead.

Okay.

Jessy Hayem: Thank you, Junine. Good morning, everyone, and thank you for joining us. Earlier today, we issued a press release announcing our results for the second quarter while updating our full-year guidance for 2025. We also issued our interim shareholder report containing management's discussion and analysis and consolidated financial statements. These documents are expected to be filed with the Canadian Securities and Regulatory Authorities and the US Securities Commission today, and they'll also be available on our corporate website. Joining me today on the call are Glenn Chamandy, President and CEO of Gildan, Luca Barile, Executive Vice President, Chief Financial Officer, and Chuck Ward, Executive Vice President, Chief Operating Officer. This morning, as usual, we'll take you through the results for the quarter, and then a question and answer session will follow.

Thank you Julien good morning, everyone and thank you for joining US earlier today, we issued a press release announcing our results for the second quarter, while updating our full year guidance for 2025, we also issued our interim shareholder report containing management's discussion and analysis and consolidated financial statements. These documents are expected to be filed with the.

Canadian Securities and regulatory authorities and the U S Securities Commission today, and they'll also be available on our corporate website.

Joining me today on the call are Glen <unk>, President and CEO of Gil Dan look up a really executive Vice President Chief Financial Officer, and Chuck Ward Executive Vice President Chief Operating Officer. This morning, as usual will take you through the results for the quarter and then a question and answer session will follow.

Jessy Hayem: Before we begin, please take note that certain statements included in this conference call may constitute forward-looking statements, which involve unknown and known risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. We refer you to the company's filings with the US Securities and Exchange Commission and Canadian Securities Regulatory Authorities. During the call, we will also discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable IFRS measures are provided in today's earnings release, as well as our MDNA. And now, I'll turn it over to Glenn.

Before we begin please take note that certain statements included in this conference call May constitute forward looking statements, which involve unknown and known risks uncertainties and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward looking statements.

We refer you to the company's filings with the U S Securities and Exchange Commission and Canadian Securities regulatory authorities. During the call. We will also discuss certain non-GAAP financial measures reconciliations to the most directly comparable I FRS measures are provided in today's earnings release as well as our MD&A and now I'll turn it over to Glenn.

Glenn Chamandy: Thank you, Jessy, and good morning, everyone. Our Gildan Sustainable Growth Strategy is on track. We're executing the plan that we have laid out, especially in this fluid environment. Our priority is to control the controllables with discipline and agility. We reported record second-quarter sales of $919 million, which were up 6.5% versus last year, driven by strong Activewear sales growth of 12%. We also reported record-adjusted diluted EPS of 97 cents a share, which increased an increase of 31% year over year, reflecting our focus on profitable growth, and we are very pleased to deliver this strong performance. We continue to demonstrate consistent execution of our Gildan Sustainable Growth Strategy, from our Bangladesh facility being ramped up to the continued pipeline of new innovation, and finally, ESG with the publication of our 21st ESG report in May. We continue to gain market share in key growth categories.

Thank you Jessie and good morning, everyone.

Our Gil down sustainable growth strategy is on track we are executing the plan that we have laid out, especially in this fluid environment our.

Our priority is to control the controllable with discipline and agility.

We reported record second quarter sales of $919 million, which were up six 5% versus last year, driven by strong activewear sales growth of 12%.

We also reported record adjusted diluted EPS of <unk>, 97 cents, a share which increased.

Kris a 31% year over year, reflecting our focus on profitable growth and we are very pleased to deliver the strong performance.

We continue to demonstrate consistent execution of our Gil Dan sustainable growth strategy.

From our Bangladesh pills facility being ramped up to the continued pipeline of new innovation and finally ESG with the publication of our 21st ESG report in May.

We continue to gain market share in key growth categories ourselves and distributor channel were further supported by strong demand of our existing brands like Gil Dan soft cotton technology comfort colors American apparel.

Glenn Chamandy: Our sales and distributor channel were further supported by strong demand of our existing brands like Gildan Soft Cotton Technology, Comfort Colors, American Apparel, and from the contribution of new brand offerings under the All Pro brand and Champion. Furthermore, we see solid momentum in our national accounts. Remember, about three-quarters of our expected sales growth in 2025 is expected to come from new programs. We're set to continue to launch additional industry-leading innovation, and we'll continue to focus on operating our global, vertically integrated low-cost manufacturing facilities, which will allow us to be flexible, agile in this operating environment with the current tariffs in place. Remember, that's significant that we have significant US cotton and yarn content in our products, and this allows for significant tariff savings since tariffs do not apply to the value of US content on imported products, a clear competitive advantage for us.

And from the contribution of new brand offerings under the all pro brand and champion.

Furthermore, we see consult solid momentum in our national accounts remember about three quarters of our expected sales growth in 2025 is expected to come from new programs.

We're set to continue to launch additional.

Industry, leading innovation and we will continue to focus on operating our global vertically integrated low cost manufacturing facilities, which will allow us to be flexible agile in this operating environment with the current tariffs in place.

Remember.

That significant that we have significant U S cotton and yarn content in our products and this allows for significant tariff savings since tariffs do not apply to the value of U S content on imported products, a clear competitive advantage for us.

Glenn Chamandy: And to mitigate the impact we do have from tariffs, we have implemented pricing action. So with that in mind, we are reaffirming our previous provided 2025 full-year guidance, and we are narrowing our adjusted diluted EPS range, all of which are supported by many drivers that should allow us to deliver on our objectives for the full year. So in conclusion, despite the prevailing uncertainty, I am confident in our ability to continue delivering as we remain on track to deliver on our three-year objectives for the 2025 to 2027 period, thanks to our solid foundation, our focus on GSG strategy, our strong industry positioning, and our experience in operating in dynamic environments, all with the focus of executing to deliver long-term shareholder value. I'm looking forward to answering your questions after our formal remarks, and now I will turn it over to Luca for the financial review.

And to mitigate the impact we do have from tariffs we have implemented pricing action.

So with that in mind.

We are reaffirming re affirming our previous provided 2025 full year guidance and we are narrowing our adjusted diluted EPS range.

All of which are supported by many drivers that should allow us to deliver on our objectives for the full year.

So in conclusion.

Despite the prevailing uncertainty I am confident in our ability to continue delivery.

As we remain on track to deliver on our three year objectives for the 20th 25 to 2027 period.

Thanks to our solid foundation, our focus on G. S. G strategy, our strong industry positioning and.

And our experience in operating in dynamic environments.

All with the focus of executing to deliver long term shareholder value.

Im looking forward to answering your questions. After our formal remarks, and now I will turn it over to Luca for the financial review.

Luca Barile: Thank you, Glenn. Good morning, everyone, and thank you for joining us today to discuss our second quarter results. Let me begin by covering the specifics of the quarter, and then I will comment on our outlook and guidance for 2025. So let's begin with the quarter's results. We reported record second-quarter sales of $919 million, up 6.5% year over year, in line with guidance provided. This reflected strong performance in Activewear, with sales up 12%, driven by higher sales volumes and, to a lesser extent, favorable product mix and higher net prices. We continued to experience a strong market response to our recently introduced products, which feature key innovations, including our soft cotton technology. Strong sales to North American distributors were complemented by continued momentum with national account customers, driven by our competitive positioning and the ongoing benefits from recent changes in the industry landscape.

Thank you Glenn.

Good morning, everyone and thank you for joining us today to discuss our second quarter results.

Let me begin by covering the specifics of the quarter and then I will comment on our outlook and guidance for 2025.

So let's begin with the quarter's results.

We reported record second quarter sales of $919 million up six 5% year over year in line with guidance provided.

This reflected strong performance in activewear with sales up 12% driven by higher sales volumes and to a lesser extent favorable product mix and higher net prices.

We continued to experience a strong market response to our recently introduced products, which feature key innovations, including our soft cotton technology.

Strong sales to North American distributors were complemented by continued momentum with national account customers driven by our competitive positioning and the ongoing benefits from recent changes in the industry landscape.

Luca Barile: During the quarter, we benefited from a slight tailwind from orders being placed in advance of our announced pricing actions. Turning to international markets, sales were down by 14% year over year as demand moderated in Europe and softness persisted in Asia due to the macroeconomic backdrop. Furthermore, and contributing to a softer quarter for international, we faced a tough comparative period in Latin America as last year's quarter included large election-related purchases. Moving on to hosiery and underwear. As we expected, sales in this category were down in the quarter. We reported a 23% decrease versus the prior year, stemming from broad-based market demand softness, unfavorable mix, and, as previously communicated, some program resets towards the second half of the year.

During the quarter, we benefited from a slight tailwind from orders being placed in advance of our announced pricing actions.

Turning to international markets sales were down by 14% year over year as demand moderated in Europe and softness persisted in Asia due to the macroeconomic backdrop.

Furthermore, and contributing to a softer quarter for international we faced a tough comparative period in Latin America as last year's quarter included large election related purchases.

Moving onto hosiery and underwear.

As we expected sales in this category were down in the quarter we.

We reported a 23% decrease versus the prior year stemming from bought from broad based market demand softness unfavorable mix and as previously communicated some program resets towards the second half of the year.

Luca Barile: Turning our focus to margins for the quarter, our gross margin was 31.5%, a 110 basis point improvement over the prior year, primarily due to lower raw material costs, lower manufacturing costs, as well as favorable pricing. SG&A expenses were down year over year at $82 million versus $124 million last year, which included significant proxy contests and leadership changes in related matters. Excluding these charges, adjusted SG&A for the quarter was $81 million, or 8.8% of sales, compared to $66 million, or 7.7% of sales in the same quarter last year, reflecting higher general and administrative expenses and variable compensation. As you may recall, the positive impact from the Barbados Jobs Credit was $17 million in the second quarter of 2024 when this credit was introduced retroactively to January 1st, 2024, as compared to a $12 million benefit recorded in the second quarter of 2025.

Turning our focus to margins for the quarter.

Our gross margin was 31, 5%, a 110 basis point improvement over the prior year pre.

Primarily due to lower raw material costs, lower manufacturing costs as well as favorable pricing.

SG&A expenses were down year over year at $82 million versus 124 million last year.

Which included significant proxy contest and leadership changes and related and related matters.

Excluding these charges adjusted SG&A for the quarter was 81 million or eight 8% of sales compared to $66 million or seven 7% of sales in the same quarter last year, reflecting higher general and administrative expenses and variable compensation.

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As you may recall, the positive impact from the Barbados jobs credit was $17 million in the second quarter of 2024. When this credit was introduced retroactively to January 1st 2024.

As compared to a $12 million benefit recorded in the second quarter of 2025.

Luca Barile: As we bring all these elements together, adjusting for restructuring and acquisition-related items in both years and costs related to proxy contests and leadership changes, which were primarily incurred in the prior year, we generated adjusted operating income of $209 million, up $13 million, or 22.7% of net sales, flat year over year and in line with guidance provided. Moving on to taxes, the company's adjusted effective income tax rate for the quarter was 17.4%, compared to 27.2% last year, which reflected the impact of the enactment of global minimum tax in Canada and Barbados with retroactive effect to January 1st, 2024. After reflecting higher net financial expenses and a lower outstanding share base, we reported record adjusted diluted EPS of 97 cents, up 31.1% year over year. Now turning to cash flow and balance sheet items for the first half of 2025.

As we bring all these elements together.

Adjusting for restructuring and acquisition related items in both years and costs related to proxy contests and leadership changes, which were primarily incurred in the prior year.

We generated adjusted operating income of $209 million up $13 million or 22, 7% of net sales flat year over year and in line with guidance provided.

Moving on to taxes, the company's adjusted effective income tax rate for the quarter was 17.4% compared to 27, 2% last year, which reflected the impact of the enactment of global minimum tax in Canada, and Barbados with retroactive effect to Janney.

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After reflecting higher net financial expenses and a lower outstanding share base, we reported record adjusted diluted EPS of <unk> 97.

Up 31, 1% year over year.

Now.

Turning to cash flow and balance sheet items for the first half of 2025.

Luca Barile: Operating cash flow was $46 million, compared to $113 million in the first half of 2024, primarily reflecting higher working capital investments. After accounting for CAPEX of $58 million, the company consumed approximately $12 million in free cash flow in the first six months of 2025, while generating $154 million of free cash flow in the second quarter. In line with our strong commitment to return capital to shareholders, during the first six months of the year, we repurchased about 2.9 million shares, returning $206 million in capital to shareholders, including $68 million in dividends. Finally, we ended the first half of 2025 with net debt of about $1.85 billion and a leverage ratio of 2.2 times net debt to trailing 12 months adjusted EBITDA, within our targeted range of 1.5 to 2.5 times. Now turning to our strategy and outlook.

Operating cash flow was $46 million compared to $113 million in the first half of 2024, primarily reflecting higher working capital investments.

After accounting for Capex of 58 million the company consumed approximately $12 million and free cash flow in the first six months of 2025.

While generating 154 million of free cash flow in the second quarter.

In line with our strong commitment to return capital to shareholders. During the first six months of the year, we repurchased about two 9 million shares returning 206 million in capital to shareholders, including $68 million in dividends.

Finally, we ended the first half of 2025 with net debt of about 1.85 billion and a leverage ratio of 2.2 times net debt to trailing 12 months adjusted EBITDA within our targeted range of one and a half to two and a half times.

Now turning to our strategy and outlook.

Luca Barile: As Glenn highlighted earlier, we are pleased with our execution and the progress made on the three pillars of our GSG strategy. First, our new manufacturing complex in Bangladesh is now fully ramped up and performing as expected. Moreover, on the innovation front, we continue to tap into the largest innovation pipeline in the company's history, with more product launches to come in '25 and into 2026. And lastly, touching briefly on ESG, we have released our 21st ESG report in May, which highlights our progress against our next generation objectives. In addition, and as we communicated in early July, Gildan was recognized as one of Canada's best 50 corporate citizens by Corporate Nights for a fourth consecutive year and was once again featured among TIME's world's most sustainable companies, which we believe is a testament to our strong commitment to sustainable practices. Now, let's turn to our outlook.

As Glenn highlighted earlier, we are pleased with our execution and the progress made on the three pillars of our G. S. G strategy.

First our new manufacturing complex in Bangladesh is now fully ramped up and performing as expected.

Moreover, on the innovation front, we continue to tap into the largest innovation pipeline in the company's history with more product launches to come in 'twenty five and into 2026.

And lastly, touching briefly on ESG, we have released our twenty-first ESG report in May which highlights our progress against our next generation objectives.

In addition.

<unk> and as we communicated in early July Gilden was recognized as one of Canada's best 50, corporate citizens by corporate Knights for a fourth consecutive year and was once again featured among times world's most sustainable companies.

Which we believe is a testament to our strong commitment to sustainable practices.

Now, let's turn to our outlook.

Luca Barile: Against the current fluid macroeconomic backdrop, we remain focused on our operational agility and remain committed to executing on our GSG strategy in order to drive strong financial performance. For 2025, we are reaffirming our full-year guidance while narrowing the range of adjusted diluted EPS. We expect revenue growth for the full year to be up mid-single digits, full-year adjusted operating margin to increase approximately 50 basis points, CAPEX to come in at approximately 5% of sales, adjusted diluted EPS to be in the range of $3.40 to $3.56, up between approximately 13% and 19% year over year, compared to our previous guidance of $3.38 to $3.58, and free cash flow is still expected to come in above $450 million. Further, the outlook which I just laid out is underpinned by some key assumptions, including the following.

Against the current fluid macroeconomic backdrop, we remain focused on our operational agility and remain committed to executing on our G. S. G strategy in order to drive strong financial performance.

For 2025, we are reaffirming our full year guidance, while narrowing the range of adjusted diluted EPS.

We expect.

Revenue growth for the full year to be up mid single digits.

Full year adjusted operating margin to increase approximately 50 basis points.

Capex to come in at approximately 5% of sales.

Adjusted diluted EPS to be in the range of $3 and 40.

To $3.56.

Up between approximately 13% and 19% year over year compared to our previous guidance of $3 38 to $3 and 58.

And free cash flow is still expected to come in above $450 million.

Further the outlook, which I just laid out is underpinned by some key assumptions, including the following.

Luca Barile: Firstly, we have considered 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. 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, the expected ongoing benefits from the Barbados Jobs Credit, as well as continued share repurchases under our NCIB program while remaining within our leverage framework. We also 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.

Firstly.

We have considered 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.

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.

The expected ongoing benefits from the Barbados jobs credit.

As well as continued share repurchases under our N C. A D program, while remaining within our leverage framework.

We also anticipate that our adjusted effective tax rate for 2025, we will remain at a similar level to what we saw for the full year in 2024.

Luca Barile: Finally, we have also provided guidance for our third quarter with net sales expected to be up low single digits year over year, reflecting a timing shift of orders from the third quarter into the second quarter and partly into the fourth quarter. We expect our adjusted operating margin to be in the same range as the second quarter of 2025. We also expect our adjusted effective income tax rate in the third quarter of 2025 to be at a similar level to that of the full year 2024. So in summary, we are very pleased with the quarter, and we remain confident in our ability to deliver continued strong financial performance amid the dynamic macroeconomic environment. Thank you, and now I'll turn it over to Jessy.

Finally, we have also provided guidance for our third quarter with net sales expected to be up low single digits year over year, reflecting a timing shift of orders from the third quarter into the second quarter and partly into the fourth quarter.

We expect our adjusted operating margin to be in the same range as the second quarter of 2025.

We also expect our adjusted effective income tax rate in the third quarter of 2025 to be at a similar level to that of the full year 2024.

So in summary, we are very pleased with the quarter and we remain confident in our ability to deliver continued strong financial performance amid the dynamic macroeconomic environment. Thank.

Thank you and now I'll turn it over to Jesse.

Jessy Hayem: Thank you, Luca. This concludes our prepared remarks, and now we'll begin taking your questions. As usual, before we move into Q&A session, I'd like to remind you to limit your questions to two, and we'll circle back for a second round if time permits. Junine, you may begin the Q&A session.

Thank you Luca This concludes our prepared remarks and now we'll begin taking your questions as usual before we move into Q&A session I'd like to remind you to limit your questions to two and we'll circle back for a second round if time permits Jeanine you may begin the Q&A session.

Yes.

Junine: Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. Again, to ask a question, please press star one on your touch-tone phone, and to withdraw your question, please press star one again. Our first question comes from the line of Mr. Paul from CITI. Sir, your line is open.

Thank you ladies and gentlemen at this time, we will be conducting a question and answer session again to ask a question. Please press star one on your Touchtone phone and to withdraw your question. Please press Star One again, our first question comes from the line of Mr. Paul <unk> from Citi. Sir Your line is open.

Various Analysts: Hey, everyone. This is Brandon Chittyman for Paul. I was hoping that you could help quantify the shifts that occurred in two Q. You know, how much was taken from three Q and how much shifts from three Q into four Q? And then I just have a follow-up on the underwear and hosiery business. If you could parse out, you know, what was the impact from the Nike sock pause versus the core business, and how do you think about that segment for the rest of the year? And anything you can share on backfilling the underarmor business that you previously exited, like, you know, what are you doing with that capacity now? Thanks.

Hey, everyone. This is Brandon Cheatham on for Paul.

I was hoping you could help quantify the shifts that occurred in <unk> how.

How much was taken from <unk> and how much shifts from Q4, two and then I just have a follow up.

On the underwear and hosiery business, if you could parse out.

What.

What was the impact from the Nikkei stock pause versus the core business and how are you thinking about that segment for the rest of the year.

Anything you can share on back filling the undrawn or business that you previously exited.

What are you doing with that capacity now.

Luca Barile: Okay, well, thank you for your question and good morning. So with respect to the second quarter, the second quarter was a very strong quarter. Activewear sales were $822. They're up 12% year over year. And like we provided on our formal remarks, some of that was aided by a tailwind of orders ahead of pricing action. So I think what you have to keep in mind here is that when you take a look at the second and third quarter really in conjunction, that would yield a growth of mid-single digit. We did guide the third quarter to being revenue up low single digit, again, with a very strong performance in Q2 and some of those sales shifting to the fourth quarter. We provided guidance on the full year. Again, as a reminder, the revenue is up mid-single digit for the full year.

Okay well. Thank you for your question and good good morning, So with respect to the this was the second.

Quarter second quarter was a very strong quarter Act.

Activewear sales were 822, they're up 12% year over year and like we provided on our on our formal remarks. Some of that was aided by a tailwind of orders ahead of pricing action.

So I think what you have to keep in mind here is that when you take a look at the second and third quarter really in conjunction that that would yield a growth of mid single digit. We did guide to third quarter, two being revenue up low single digit again with a very strong performance in Q2, and some of those sales shifting too.

The fourth quarter, we provided guidance on the full year again as a as a reminder, the revenue was up mid single digit for the full year.

Luca Barile: And the way I think you have to really interpret the guidance across the results in the second quarter and the guidance for the remainder of the year is that you have to start with the market assumption, right? And the market assumption really is, look, you look at Q1, the market was down. We had informed the market of that. In the second quarter, the market was still down but improving, right? And that is expected to continue to improve. And the market assumption for the guide is that the market will be down to low single digit for the full year. So what we've done as a result is we've reaffirmed our top line. We're really happy with the way sales are progressing, revenue up mid-single digit.

And the way I think you'll have to really interpret the guidance across the second the results in the second quarter and the guidance for the remainder of the year is that you have to start with the market assumption right and the market assumption really is look you look at Q1. The market was down we had we had informed the market of that in the second quarter the market was still down but in.

Proving right and we and that is expected to continue to improve and the market assumption for the guide is that the market will be down to low single digit for the for the full year. So what we've done as a result, as we've reaffirmed our topline we're really happy with the way sales are progressing revenue up mid single digits, but what we've done is we've now.

Luca Barile: But what we've done is we've narrowed the range when it comes to EPS by two cents on the low and two cents on the high, reflecting some of the conservatism that is or uncertainty that's in the market. And I would say that from a growth perspective, again, the vectors are that we continue to take share, strong Activewear performance, even though the market is down. That was the first part of your question. Maybe Chuck for the second part?

So the range when it comes to EPS by two cents on the LOE in two cents on the high.

Reflecting some of the conservatism that is our uncertainty that's in the market.

And I would I would say that from a growth perspective again. The vectors are that we continue to take share strong activewear performance, even though the market is down that was the first part of your of your question maybe Chuck for the second part yes. Thank you Luca.

Chuck Ward: Yeah, thank you, Luca. Yeah, to answer your question on the other part, you know, as Luca said, we're very happy with our Activewear and our new programs we delivered during the quarter, but we did have some headwinds, as we talked about a little bit in the innerwear. You know, it was things like delayed store sets. There was a little market softness. But, you know, yes, we do have some customers that are doing some program and product resets. That will continue to happen and ramp up throughout the year. So we do expect it to continue to improve quarter over quarter for the remaining of the year as we go forward. So, you know, we often see program resets and its timing, and we work through those. So we expected some of that, and we're facing that as we go through the year.

Yeah to answer your question on the other part of it as Luca said.

We were very happy with their our activewear and our new programs, we delivered during the quarter, but we did have some headwinds as we talked about a little bit in the innerwear. You know it was things like delayed store sets there was a little market softness, but yes, we do have some customers that are doing some program of product resets.

That will that will continue to happen and ramp up throughout the year. So we do expect it to continue to improve quarter over quarter for the remaining of the year.

As we go forward so.

We you know, we often see program reset some of its timing and we worked through those so.

We expected some of that and we're facing that as we go through the year.

Glenn Chamandy: Yeah, and it's not structural. This will work itself out and will be on, I think, on a better pace as we go into the second half.

Yeah, and its not structural this will this will work itself out and we'll be on it I think on a better pace as we go into the second half.

Various Analysts: Does that imply the second half is positive in the hosiery and underwear business? Anything you can quantify? Just try to think about.

Does that imply second half is positive in the underwear business.

Anything you can quantify or just how to think about.

Luca Barile: Yeah, so we've provided the guide, I guess, you know, for Q3. But what we can share is that we definitely see sequential improvement in the underwear and hosiery category and positivity as we move through the rest of the year.

Yeah. So we've provided the guide I guess you know for Q3, but what we can share is that we definitely we see sequential improvement in the underwear and hosiery category.

And positivity as we move through the rest of the year.

Various Analysts: Got it. Appreciate it. Thanks. Good luck.

Got it appreciate it thanks good luck.

Junine: Thank you. Our next question comes from the line of Mr. Chris from Desjardins. Sir, your line is open. Hello, Mr. Chris, your line is open.

Thank you. Our next question comes from the line of Mr. Chris <unk>, Sir Your line is open.

Hello, Mr. Chris Your line is open.

Jessy Hayem: It looks like he dropped off, Junine. Can we move on to the next one?

It looks like he dropped off Genie can we move on to the next one.

Junine: Yes, will do. Our next question comes from the line of Mr. Jay from UBS. Sir, please go ahead.

Yes, we will do our next question comes from the line of Mr. Jay from UBS. Sir. Please go ahead.

Various Analysts: Great. Thank you. This is Jay Soan from UBS. My question is about the comment in the press release. You mentioned that the Activewear business, you know, you're seeing continued momentum from national accounts, and that's driven, you know, in part by continued benefit from recent changes in the industry landscape. Can you just expand on that a little bit and tell us, you know, what kind of changes you're seeing and what the opportunity is going forward? Thank you.

Great. Thank you. This is Jay so on from UBS Bank.

Question is about the.

Hi comment in the press release, you mentioned that the activewear business Youre seeing continued momentum from national accounts and Thats driven.

Part by continued benefit from recent changes in the industry landscape can you just expand on that a little bit and tell us.

What kind of changes you're seeing and what the what the opportunity is going forward. Thank you.

Okay.

Chuck Ward: Yeah, Jay, it's Chuck. You know, we're continuing to see things move around. Obviously, there's a lot of change going on in the industry, also with tariffs and other things in the economic backdrop. And as we do that, we see customers continue to look to different suppliers. And one thing that we provide, obviously, with our globally vertically integrated manufacturing is, Glenn mentioned in his comments, we provide stability in an uncertain environment. And so we're seeing, you know, benefits of that. So as we see our strong Activewear, we POS, you know, for North America specifically, you know, it is driven by, you know, our GLB customers, our retail, and our large screen printers. And the big thing there is, as Luca talked a little bit about the market, we are continuing to gain share in key categories. I mean, we're continuing to grow in ring spun.

Yeah, Jay it's Chuck.

We're continuing to see things move around obviously theres a lot of change going on in the industry also with tariffs and other things in the economic backdrop.

And as we do that we see customers continue to look.

To different suppliers and one thing that we provide obviously with our globally vertically integrated manufacturing as Glenn mentioned in his comments, we provide stability in an uncertain environment and so we're seeing benefits of that.

So as we see our strong activewear, we P O S for North America, specifically it is driven by.

Our jewelry customers, our retail and our large screen printers.

And the Big thing there as Luca talked a little bit about the market. We are continuing to gain share in key categories. I mean, we're continuing to grow and ring spun a specifically comfort colors is continuing to do quite well.

Chuck Ward: Specifically, Comfort Colors is continuing to do quite well, and we're growing in that. So against a good, you know, against a maybe a macroeconomic backdrop that wasn't as positive, we've done quite well.

And we're growing in that so.

Against a good guest a.

Maybe a macroeconomic backdrop that wasn't as positive we've done quite well and then maybe I'd answer that is I look at you know, we're well positioned because of our U S cotton and U S. Yarn I mean, we have a I would say a lesser impact on the impact of terrorists from particularly from Central America. So.

Glenn Chamandy: And maybe add on to that is I look at, you know, we're well positioned because of, you know, our US cotton and US yarn. I mean, we have a, I would say, a lesser impact on the impact of tariffs from, particularly from Central America. So, you know, one thing that we called out is that, you know, when we look at our whole manufacturing and our manufacturing capacity, you know, what we said is that for this year, we're running around 90% of our capacity. We do have enough capacity installed today to handle, you know, the three-year period, 25 to 27. But as we speak, we are actually incrementally adding additional capacity in Central America because we believe there will be, you know, potential opportunity as we move forward, particularly in our positioning. Because look, this is a very fluid situation.

One thing that we called out is that when we look at our whole manufacturing and our manufacturing capacity. What we said is that for this year, we're running around 90% of our capacity we do have.

Enough capacity installed today to handle 23 year period 25 to 27, but as we speak we are actually incrementally, adding additional capacity in Central America, because we believe that there will be a potential opportunity as we move forward.

Particularly in our positioning because this is a very fluid situation everyday.

Glenn Chamandy: Every day, tariffs are moving around, you know, qualifying goods, not qualifying goods. It could be anywhere between 20 to 40%. So these are significant tariffs, basically. And, you know, we're well positioned, we think, to take advantage of that. So, you know, it takes time for these things to develop. It just doesn't happen overnight. People just don't wake up one day and say, "Hey, I'm going to change my supply chain." But it's moving in the right direction, and we're very confident that we're well positioned to take advantage, particularly with our national accounts. And people, you know, people book, you know, sometimes six, eight, nine months in advance because of the lead time, particularly in retail from Asia.

Terrorists are moving around.

Qualifying goods not qualifying goods it could be anywhere between 20% to 40%. So these are significant terrorist basically.

And we're well positioned we think to take advantage of that so you know it takes time for these things to develop it doesn't happen overnight people just don't wake up one day, and say, hey, I'm going to change my supply chain, but it's moving in the right direction and we're very confident that we're well positioned to take advantage, particularly in and with our national accounts.

And people.

People book, sometimes 689 months in advance because of the lead time.

Particularly in retail from Asia. So.

Glenn Chamandy: So, you know, as we move into forward, you know, I think that they're taking that risk on where tariffs will be is creating uncertainty for a lot of these customers. So I think we're well positioned. And, you know, like what we said in our last call is we do have good visibility as we already move into 2026, which is really a reflection of the opportunity in hand.

We move into forward.

Well I think that they are taking that risk on where tariffs would be is creating uncertainty for a lot of these customers. So I think we're well positioned and like what we said in our last calls we do have good visibility as we already moved into 2026, which is really a reflection of the opportunity at hand.

Various Analysts: Got it. Okay. Glenn, thank you so much.

Got it okay. Thank you so much.

Junine: Thank you. Our next question comes from the line of Brian Morrison from TD Cowan. Sir, your line is open.

Thank you. Our next question comes from the line of Brian Morrison from TD, Kevin Sir Your line is open.

Various Analysts: Oh, thanks very much. Glenn, I want to follow up on that comment that you're making, specifically nearshoring national accounts and GLB tariff relocation opportunities. How much can you actually increase the throughput in Honduras and with the uncertainty that's out there? Can you give us some timing and magnitude potentially of, you know, the opportunity?

Okay. Thanks, very much Glenn I want to follow up on that comment that you're making specifically near shoring national accounts in <unk> tariff relocation opportunities.

How much can you actually increase the throughput in Honduras and with the uncertainty that's out there can you give us some timing and magnitude potentially.

The opportunity.

Glenn Chamandy: Well, we're going to, you know, and the thing about what we're trying to do is we're, you know, we're adding, you know, extra capacity within the four walls of our existing facilities. You know, it's so it's a little bit we run five operating plants in this hemisphere, basically. So, you know, we'll add a little bit in each plant. But I would say that we will be able to yield a good 10% more additional capacity overall, basically, in our system. And that will be installed as we go through this year.

Well, we're going to.

And the thing about what we're trying to do is we're adding.

Extra capacity within the four walls of our existing facilities.

So it's a linear we run five operating plants in this hemisphere basically so we'll add a little bit in each plant, but I would say that we will be able to yield a good 10%.

More additional capacity overall basically in our system and that will be installed as we go through this year.

Various Analysts: So 10% on 550 per plant? Call it 250 million. Is that what we're saying?

So 10% on 550 per plant.

Call. It 250 million is that what we're saying.

Glenn Chamandy: Well, I would say probably maybe just a little bit more than that.

Well I would say, probably maybe maybe just a little bit more than that.

Various Analysts: Thank you. And then my second question, sir, go ahead.

Thank you and then my second question Sorry go ahead.

Glenn Chamandy: Yeah. No, you go ahead.

Go ahead.

Various Analysts: My second question is actually on the Bangladesh facility. I believe you've been over there now. Is it running at optimal levels of efficiency? When will the inefficiencies be out of inventory? And maybe just in terms of the cash cost savings, I think it's 25% relative to Honduras. How do you view this in various tariff scenarios?

My second question is actually on the Bangladesh facility. It's I believe you've been over there now is it running at optimal levels of efficiency when will be inefficiencies be out of inventory and maybe just in terms of the cash cost savings I think it's 25% relative to Honduras, how do you view this in various tariff scenarios.

Glenn Chamandy: Okay, well, I would say to you is that, look, we're already seeing the benefit of Bangladesh because we're projecting to have operating margin expansion as we move through the year. And a lot of that operating margin expansion is coming from our Bangladeshi facility because, you know, we really haven't had the impact of our yarn modernization project hit our P&L yet. So that's probably going to go into 2026. So that will have continued operating margin improvement. That's how we're essentially being able to do that. And as well as, you know, obviously, as we utilize our Central American facilities, that's another, you know, even consuming the first phase of running at 100% would allow us for additional, you know, I think, you know, margin improvement. But when you look at Bangladesh, it's fully ramped up.

Okay, well I would say to you is that look we're already seeing the benefit of Bangladesh, because we're projecting to have operating margin expansion as we move through the year and then a lot of that operating margin expansion is coming from.

Our Bangladesh facility, because we really haven't had the impact of our yarn Modernisation project hit our P&L yet so that's probably going to go into 2026. So that we'll have continued operating margin improvement that's how we're substantially being able to do that.

And as well as you know obviously as we utilize our central American facilities that's another.

Evens consuming the first phase of running at a 100% would allow us for additional.

I think margin improvement, but when you look at the Bangladesh, it's fully ramped up.

Glenn Chamandy: And, you know, Bangladesh services basically about half of the volume is going to service international markets: Europe, Canada, Japan, Australia, et cetera. And the other half is coming this way, basically. So we are using US cotton in Bangladesh. So we're, you know, we're offsetting the tariff impact from US cotton. And we also have some other flexibilities within our supply chain to mitigate where some of that fabric is being sewn so that we can reduce the amount of tariffs. So we're very comfortable with our positioning. I think we have a good handle on the cost of tariffs. And like what I said earlier is that we also take minimal price increases to support to differentiate between, you know, the cost of tariffs and not so. So we've taken price to respond to it as well. So we're fully covered.

And Bangladesh services basically about half of the volume is going to service International markets, Europe, Canada, Japan, Australia et cetera, and the other half is coming this way basically so we are using U S. Cotton in Bangladesh. So we're you know we're offsetting the tariff impact from U S. Cotton and we also have some other floor.

<unk> abilities within our supply chain to mitigate.

Where some of that fabric is being sold so that we can reduce the amount of tariff. So we're very comfortable with our positioning I think we have a good handle on.

The cost of tariffs and like what I said earlier is that we also take minimal price increases to support to differentiate differentiate between the cost of tariffs and nachos. So we've taken price too to respond to it as well so we're fully covered.

Glenn Chamandy: I think that we are in a better position than anybody else. And, you know, I think that as we move forward in the, you know, coming years, basically, as this works itself through, I think that we're in good shape. I mean, you know, yesterday, India, 25%. Vietnam is, you know, 20%, but that's on, you know, on products that are being totally produced in Vietnam. So a lot of products that are produced in Vietnam are coming from a fabric coming from China. You know, what we're seeing is that could be a 40%, you know, tariff rate. So, you know, overall, I think that we're very excited about our positioning.

I think that we are in a better position than anybody else and.

You know, we think that as we move forward in the coming years basically as this works itself through I think that.

We're in good shape, I mean, you're always yesterday, India, 25%, Vietnam, Israel 40, 20%, but that's on.

Hum.

Some products that are produced in Vietnam. So a lot of products that are produced in Vietnam are coming from fiber coming from China. What were seeing is that could be a 40%.

A tariff rate. So overall I think that we're very excited about our positioning.

Glenn Chamandy: We're going to leverage our low-cost vertically integrated manufacturing, and, you know, we're excited, and it's a reflection of really of our positioning, not only on our manufacturing side, but I would say that we're well positioned from a product side too, with all of our innovation, our brand strategy. I mean, we've got five great brands right now that we're bringing to market, and all of them are doing well. And Comfort Color is knocking it out of the box again this year. So, you know, things are going well, and that's a reflection of our 12% growth in Activewear for the quarter.

On the leverage.

Our low cost vertically integrated manufacturing and we're excited and it's a reflection of really of our positioning not only on our manufacturing side, but I would say that we're well positioned from a product side too with all of our innovation Our branch strategy. I mean, we've got five great brands right now that we're bringing to market and all of them are doing well and comfort colors.

Is knocking it out of the box again this year so things.

Things are going well and that's a reflection of of our 12% growth in in October for the quarter.

Various Analysts: Very good. Thank you.

Okay. Thank you.

Junine: Thank you. Our next question comes from the line of Mark from CIBC. Sir, please go ahead.

Thank you. Our next question comes from the line of Mark from CIBC. Please go ahead.

Various Analysts: Yeah, thanks. Good morning. I wanted to actually just follow up, Glenn, on your comment with regard to price. If you could just expand a little bit on the magnitude of that, the timing, and then what you've seen more broadly from competitors and how they've responded to the tariff pressures.

Thanks, Good morning, I wanted to actually just follow up Glenn on your comment with regards to price if you could just <unk>.

Expand a little bit on the magnitude of that the timing.

And then what you've seen more broadly from competitors.

And how they've responded to.

To the tariff pressures.

Glenn Chamandy: Well, I would say that, look, pricing is all over the place a little bit because we have different customers with different lead times. And, you know, we have also different product categories that have a little bit higher tariffs than others, like, you know, imported socks, for example, things like that. So, you know, the pricing is, you know, sequentially being, you know, rolled out basically in a very uniformed way. But it's not substantial, I would say. I mean, when you look at the price impact, I think that's the point so far because, you know, we mitigated a lot of the, you know, the tariff costs. And then, you know, there could be, you know, more price being rolled out as we go forward. It's not completely all done yet. But, you know, I think we're in a relatively good position.

Well I would say that look at pricing is all over the place a little bit because we have different customers with different lead times and we have also different product categories that have little bit higher tariffs and others I can reported Socs for example, things like that so the pricing is.

Sequentially being.

<unk> rolled out basically.

And a very.

Uniformed way.

But it's not a it's not substantial I would say I mean, when you look at the price impact I think that's the point so far because we mitigated a lot of the.

Of the.

The tariff costs and then there could be a more price being rolled out as we go forward, it's not completely all done yet.

But I think we're in a in a relatively good position and.

Glenn Chamandy: And, you know, all the competitors have, you know, have the same issue, basically, because most of them are not even having the best, the same cost structures we have. So they could be further impacted than we are in terms of the tariff impact. And, you know, the one thing I think I'd like to always make people remember, particularly in our wholesale business, is that, you know, we were selling shirts. Wholesalers were selling our shirts, reselling them for $2.25 a shirt. So, you know, the shirt goes up by 10 cents a unit. You got to remember that that shirt's still being sold in a souvenir store for $25. So it goes from us to the distributor to the printer to a reseller to a retailer.

All of the competitive competitors have.

<unk> have the same issue basically because most of them not even having the best the same cost structure as we have so there could be further impacted than.

And then we are in terms of the tariff impact.

And the one thing I think I'd.

I'd like to always.

People remember, particularly in our wholesale business is at.

We were selling shirts wholesalers were selling our shirts reselling them for $2 25 sensor shirts. So.

The share goes up 10 cents of unit.

Remember that that shirts still being sold in a souvenir store for $25. So it goes from us at a distributor to the printer to a reseller to a retailer. So 10 sensor unit on a supplier that's something that's been handed over five times before it gets the consumer's insignificant and we have a lot of opportunity I think in terms of price.

Glenn Chamandy: So, you know, 10 cents a unit on a supplier that it's been on something that's been handed over, you know, five times before it gets to consumer is insignificant. And we have a lot of opportunity, I think, in terms of price elasticity, particularly in our wholesale business. So, you know, I think we're well positioned, and we'll continue going, and we'll see what happens. The situation is still fluid. We don't know what happens August 1st. I mean, tomorrow's another day. But we're well positioned to navigate through any of these challenges, I can tell you that.

The system, particularly in our wholesale business so.

I think we're well positioned.

And we will continue growing and we'll see what happens there. So the situation is still fluid. We of course, we don't know what happens August 1st meeting Tomorrow is another day, but we're well positioned to navigate through any of these challenges I can tell you that.

Various Analysts: Yeah. Okay. Fair enough. Maybe just a slightly different angle then on the pricing side. Maybe first, just if you could clarify if the price actions were sort of consistent across your different channels and sort of segments. And then if you were to look back, you know, call it six months ago to a pre-tariff or sort of unaffected pricing environment, would the price gaps to peers or competitors today be about the same, or do you think they've narrowed or expanded as a result of all of the different noise over the last half year?

Yeah, Okay fair enough maybe just.

A slightly different angle that on the pricing side, maybe first just if you could clarify if the price actions were sort of consistent across your different channels.

And sort of segment and then if you were to look back you know.

Call it six months ago too.

Our pre tariff or or sort of unaffected.

Pricing environment with the price gaps to peers or competitors today be about the same or do you think they've narrowed or expanded as a result of all of the different noise over the last.

Half year.

Glenn Chamandy: I would say everything's rolling in the same direction, going up equally on a product-per-product-like basis within the marketplace. So there's been really no change because everybody's got the same impact. And in terms of pricing, like I said earlier, you know, we have different markets and different products with different contributions. So we're consistent, I would say, within the market and all of the categories in which we sell. So there's been a consistent theme because everybody's pretty much rolling in the same direction, right? So, and everybody's taken price where they had to, basically, depending on those products. So, you know, products that aren't made in this hemisphere, you know, had a larger impact, basically, than products that, you know, from Asia, for example, that just don't are not conducive to making in this hemisphere, like, you know, dress socks, for example.

I would say everything is rolling in the same direction going up equally.

On the on our product per product like basis within the marketplace, where there's been really no change because everybody's got the same impact.

And.

In terms of pricing like I said earlier, we have different markets and different products with different contribution. So we're consistent I would say within the market and all of the categories in which we sell so there has been a consistent theme because everybody's pretty much rolling in the same direction right. So.

And everybody has taken price, where they had to basically depending on.

Those products so.

Products that are made in this hemisphere had a larger impact basically then products from Asia for example that just not.

Not conducive to making unison miserably.

Dress socks for example.

Glenn Chamandy: You know, we just don't make them here. I mean, and nobody does. So, so those, you know, but everybody is sort of aligned, I would say, and everybody's rolled out pricing in a sequential manner, either in the wholesale market or in the retail market.

We just don't make them here I mean, nobody does so so.

So those yield but everybody is sort of aligned I would say and everybody's rolled out pricing and sequential manner.

Either in the wholesale market or in the retail market.

Various Analysts: Okay. Thanks for the comments. All the best.

Okay. Thanks for the comments all the best.

Glenn Chamandy: Thank you.

Thank you.

Junine: Thank you. Our next question comes from the line of Mr. Morton from Stuyfull. Please go ahead.

Thank you. Our next question comes from the line of Mr. Martin from Stifel. Please go ahead.

Various Analysts: Hi, good morning, everyone. I would like to talk to Glenn about the US distributor landscape. You know, it's been almost a year since two large distributors merged. I was wondering, you know, what's been the impact for Gildan? Have they closed warehouses? Have they reduced inventory in the channel? Any color would be great.

Hi, good morning, everyone.

I would like to talk about the U S distributor landscape, it's been almost a year since.

Two large distributors marriage I was wondering.

What's been the impact for Guild then.

At the close warehouses have been reducing inventory in the channel.

Any color would be great.

Glenn Chamandy: Well, I would say, look, I mean, you know, we haven't had an impact because our Activewear sales were up 12%. So it's a good reflection of, you know, our positioning in the market, and we're continuing to take market share in that market. As regarding, you know, our largest customer today, who's now consolidated, that consolidation is completely finished. The warehouses are completely integrated. I would say the acquisition integration is completely finished. It was done in Q2. So, you know, we haven't really seen any impact. In fact, you know, we continue to see positive impact because, you know, as we said in previous calls, there's continuing to be, you know, reduction in brands in the market. I mean, the market is overbranded, oversorted in terms of available brands. And, you know, we are continuing to leverage our footprint.

Well I would say look at it I mean, we haven't had an impact because our activewear sales were up 12%. So it's a good reflection of you know.

The positioning in the market and we're continuing to take market share in that market.

Regarding.

Our largest customer today, who is now consolidated.

That consolidation is completely finished the warehouses are completely integrated.

I would say the acquisition.

Integration is completely finished it was done in Q2 so.

No we haven't really seen any impact in fact, we continue to see positive impact because.

As we said in previous calls there is continuing to be.

Reduction in brands in the market I mean, the market is over branded over assorted in terms of available brands and we are continuing to leverage our footprint.

Glenn Chamandy: And then we think that we're continuing to be the beneficiary consolidation, which has been happening for, you know, obviously, the 25 years that it's been happening. So our brands are running. We've actually launched new brands. We have All Pro, which is a new brand that we launched this year, as well as the Champion brand. So, you know, we've got a really good, I think, footprint. And I also add on to that is that the competitive landscape is weakening, you know, even further. Our competitors are, you know, because look, we're leveraging our low-cost vertically integrated manufacturing. You know, we've seen Delta go out of business last year, Fruit of Loom by Vessor, Brampton in the market, and other people in the industry that are having financial issues, basically, which, you know, we see.

And then we think we're continuing to be the beneficiary of consolidation, which has been happening for you know obviously the 25 years has been happening. So our brands are running we've actually launched new brands, we'd have all pro which is a new brand that we launched this year.

As well as the champion brand. So we've got a really good.

I think footprint.

Also add onto that is that the competitive landscape is weakening.

We even further.

Competitors are because look at where we.

We're leveraging our low cost vertically integrated manufacturing.

Indeed Delta as we go out of business last year of Trous-de-loup Divesture brand for the market and other people in the industry that are having financial issues basically which.

Which we see so I think that we're well positioned to be a leader and continue leading and.

Glenn Chamandy: So I think that we're well positioned to be a leader and continue leading. And it's a good reflection of our strong performance with Activewear beating up 12% for the quarter.

And it's a good reflection of our strong performance with activewear, beating up 12% for the quarter.

Various Analysts: Okay. And just on the outlook, you know, in the U, you know, we're seeing a rebound in consumer confidence, and it looks like concerns about a US recession are abating. So I'm wondering if you're seeing that with your clients, you know, especially I'd love to hear you talk about a bit more about corporate promotional activity. Do you expect corporate spending to rebound in H2?

Okay, and just on the outlook.

In the U S.

Seeing a rebound in consumer confidence and it looks like concerns about a U S recession are abating.

I'm wondering if you're seeing that with your clients, especially I'd love to hear you talk about a bit more about.

Corporate promotional activity.

Do you expect corporate spending to rebound in <unk>.

Glenn Chamandy: Look, you know, we don't have a crystal ball, to be honest with you. So what Luca said earlier is that, look, at the market, you know, was down in Q1. You know, January was a phenomenal anomaly, basically, because of the weather, the fires, and all those things. But taking out January, I think we've seen a consistent sort of flow in the market. And that could be, you know, the corporate promotional side is definitely weak. But, you know, there's all different aspects of the market. That's what's so great about the printware market. You know, it's tourism, it's travel, it's the experience, it's crater economy. It's all these things that, you know, sort of drive the market.

Okay.

Don't have a crystal ball to be honest with you. So what Luka said earlier is that look at the market was down in Q1.

January was a phenomenal anomaly basically because of the weather the fires and all those things, but taking a January.

We've seen a consistent sort of flow in the market.

And that could be.

Corporate promotional side is definitely weak.

But you know there's all different aspects of the market. That's what's so great about the premier market. It's tourism has traveled to experience its creator economy. It's all these things at.

Sort of drive the market, but we've taken an approach where we see that the market is going to slightly improve as we go through the year and particularly because Q4 is when the market Q3, and Q4 towards end of Q3 and Q4, we saw a greater downturn in 2024, so we're going to be comping.

Glenn Chamandy: But, you know, we've taken an approach where we see that the market is going to slightly improve as we go through the year, and particularly because, you know, Q4 is when the market Q3 and Q4, towards the end of Q3 and Q4, we saw a greater downturn in 2024. So we're going to be comping, you know, sales at on a different basis. So, you know, we're taking a view that the market is, you know, not going to be robust. I mean, we believe that consumers will come back. Interest rates still haven't moved yet. So when they do come down, that's going to create some consumer confidence again. So it's early days. You know, we're cautiously optimistic. We control what we can control, to be honest with you. And, you know, we're taking a view. And, you know, there's still a lot of uncertainty.

Sales that on a different basis so.

We're taking up.

Our view is that the market is not going to be robust I mean, we believe that consumers will come back interest rates are still haven't moved yet so when they do come down that's going to create some consumer confidence again.

So it's early days, we're at we're cautiously optimistic we control what we can control beyond this with you.

And we're taking your view and there's still a lot of uncertainty I mean, we don't know whats going to happen tomorrow I'll be honest with you. So I think we're in a really good position I think that we've laid out and delivering we're executing we've got strong sales good earnings.

Glenn Chamandy: I mean, we don't know what's going to happen tomorrow, to be honest with you. So I think we're in a really good position. I think that we've laid out and delivering. We're executing. We've got strong sales, good earnings. We got good visibility as we, you know, with all the programs. You know, part of what's happening in the second half is that a lot of those new programs that we called out, which three-quarters of our program, they're being launched in the back half of this year. Our big, you know, Activewear programs at retail, I mean, they're just being shipped as we speak. So they're providing a good base of sales growth for us regardless, really, of where the market's going to be. And look, with all this instability, we've already got good visibility on 2026.

Good visibility as we you know with all of the programs you know part of what's happening in the second half is it a large those new programs that we called out which is three quarters of our program, they're being launched in the back half of this year.

Activewear programs at retail I mean, they're just being shipped as we speak so there they are providing a good base of sales growth forests, regardless really of where the market is going to be and look it with all of this instability. We've already got good visibility on 2026. So look we got to take things with a grain of salt, we don't know what's going to happen we're cautious.

Glenn Chamandy: So look, we got to take things with a grain of salt. We don't know what's going to happen. We're cautiously optimistic, and I think we're well positioned.

The optimistic and I think we're well positioned.

Various Analysts: Okay. Thank you and best of luck.

Okay. Thank you and best of luck.

Junine: Thank you. Our next question comes from the line of Steven from BMO Capital Markets. Sir, please go ahead.

Thank you. Our next question comes from the line of Steven <unk> from BMO capital markets. Sir. Please go ahead.

Chuck Ward: Oh, thank you. Good morning, everyone. I'm just wondering if you can give a little bit of color around kind of the Activewear growth components in the quarter, you know, specifically sort of what POS growth was by, you know, Fashion Basics, Lease Basics, and what you saw in terms of industry growth in Q1, Q2, sorry, and how your growth compared to that.

Thank you and good morning, everyone.

Just wondering if you can give a little bit of color around kind of the.

Activewear growth components in the quarter.

Specifically sort of what Pos growth was.

By in our fashion basics fleece basics and what you saw in terms of industry growth in Q1, Q2, sorry in how your growth compared to that.

Glenn Chamandy: Look, I would just say to you, look at our growth is driven really by our brand strategies. Our Gildan soft cotton technology is continuing to work well. Our Comfort Colors brand is basically, you know, it's on fire still. I mean, you know, we've got very good growth. AA is actually our American apparel brand is actually gaining a lot of traction in the industry today. We launched All Pro this year. It's a brand new brand for us. It's more performance-based. It's, you know, 100% poly-type products and performance. And obviously, our Champion brand is on track, which we said is going to be about a $100 million business over the three years. So all of these things are driving it. And if you peel back the onion within each one of the categories, it's fleece, it's ring spun T-shirts.

Look I would just say to you look at our growth is driven really by our brand strategies are <unk> soft cotton technology is continuing to to work well our comfort colors brand is basically you know it's on Firestone.

Got a very good growth.

A as actually our American apparel brand is actually gaining a lot of traction in the industry. Today, we launched all pro this year, it's a brand new brand for US it's more performance based.

It's 100% poly type products and performance and obviously our champion brand is on track, which we said is going to be about $100 million business over the three years. So all of these things are driving and then when we peel back the onion within each one of the categories. It's fleece, it's ring spun T shirts, it's basically because we have them all in the same cat.

Glenn Chamandy: It's basically because we have them all in the same categories, right? So, you know, we've got a very good diverse portfolio of brands, and then we have products within those brands that are continuing to drive and take market share. So overall, we're well positioned, and it's all of these things that are continuing to contribute to our 12%, you know, Activewear growth.

<unk> right. So we've got a very good diverse portfolio of brands and then we have products within those brands that are continuing to drive and take market share. So overall, we're well positioned and.

All of these things that are continuing to contribute to our 12%.

Activewear growth.

Chuck Ward: Okay. Thank you. And then maybe just with respect to some of the new products in the back half of the year, you've referenced that a number of times. Can you give any specifics around kind of what those are and what channels you're specifically referring to?

Okay. Thank you and then and then maybe just with respect to some of the new products in the back half of the year.

You've referenced a number of times.

Can you give any specifics around kind of what those are and what channels you are specifically referring to.

Various Analysts: Yeah, I mean, we, you know, I think as we said before, I think as we said before, we have a, you know, we have products across each of the categories and each of the channels that we're launching. So I would say, as Glenn said, I mean, we see some things with the new brands and things that we've launched in distributors. We have things in national accounts with some of our GLB customers. We have some additional programs with large retailers as well. So the good news is it's kind of across channels and across products.

Yes.

I think as we said before I think as we said before we have a we have products across each of the categories in each of the channels that we're launching so I would say as Glenn said I mean, we see some things with the new brands and things that we've launched in distributors, we have things in national accounts with some of our <unk> customers, we have some additional <unk>.

Programs with large retailers as well so.

So the good news is it's kind of across channels and across products.

Glenn Chamandy: And they're meaningful, right? Because the bulk of our three-quarters of our sales increase, you know, a lot of that's coming in the back half, particularly with the large, you know, fleece program with our large national account customer, you know, more shelf space in the innerwear area. So, you know, it's all really, and that's why we're confident really as we move into really Q4, as you see the, you know, the bigger increase in revenue is contributed from a lot of these new programs.

And then there are meaningful right because the bulk of our three quarters of our sales increase and a lot of that is coming in the back half, particularly with the large.

Please program with our large national account customer.

No more.

Large more shelf space in the Innerwear area. So it's all really and that's why we're confident really as we move into really Q4 as you see the the bigger increase in revenue is contributed from these new programs.

Chuck Ward: That's great color. Thanks, guys. Appreciate it.

That's great color. Thanks, guys appreciate it.

Okay.

Junine: Thank you. Our next question comes from the line of Mr. Luke from Canaccro Genuity. Please go ahead.

Thank you. Our next question comes from the line of Mr. <unk> from Canaccord Genuity. Please go ahead.

Various Analysts: Thanks. Good morning, and thanks for all the commentary thus far. I wanted to follow up as it relates to the outlook for the year and specifically what's being implied from an operating margin perspective. Glenn, I think you just kind of touched on it there. Q4, it sounds like, should be pretty favorable when it comes to sales program wins. I imagine that also is translating into the implied operating margin strength. I'm just more curious, I guess, about the raw materials outlook. When it comes to cotton costs, it seems like it's been relatively stable of late. Should we expect those tailwinds to sort of dissipate towards the end of the year and into next? Or maybe just frame up for us the drivers behind operating margin for the balance of the year?

Thanks, Good morning, and thanks for all the commentary thus far I want to follow up as it relates to the outlook for the year and specifically, what's being implied from an operating margin perspective, Glenn I think you just kind of touched on it there Q4, it sounds like it should be pretty favorable when it comes to sales program wins I imagine that also is translating into the implied operating margin strength I'm just more curious.

I guess about the raw materials outlook when it comes to cotton costs. It seems like it's been relatively stable of late should we expect those tailwind to sort of dissipate towards the end of the year and into next year, maybe just.

Frame up for us the drivers behind the operating margin for the balance of the year.

Luca Barile: Yes, thank you for your question. So if we start with the guide, right? So we're guiding operating margin for the year to be up approximately 50 basis points versus 2024. As you alluded to, when you look at the evolution of the margin profile, you know, in the second quarter, we had very strong gross margins, and we had sub-10% SG&A. When you look at the gross margin, that was delivered in part driven by lower raw material costs. That was delivered as planned. We saw some price favorability there. The way to think of the gross margin is that's going to, you know, sequentially improve. That's included within the guide. And when you look at the drivers of the operating margin guide for the full year, that 50 basis point accretion, Glenn had alluded to these drivers earlier in the call. The ramp-up of our Bangladesh facility, right?

Yes. Thank you for your question. So if we start with the guide right. So we're guiding operating margin for the year to be up approximately 50 basis points versus 2024, and as you alluded to when you look at the evolution of the <unk> of the margin profile in the second quarter, we had strong growth very strong gross margins and we had sub 10% SG&A.

When you look at the gross margin that was delivered in part driven by lower raw material costs that was delivered as planned we saw some price favorability there the way to think of the gross margin is that's going to sequentially improve that's included within the guide.

And when you look at the drivers of the operating margin guide for the full year that 50 basis point accretion Glenn alluded to these drivers earlier in the call.

The ramp up of our Bangladesh facility right. The cost advantage there that's starting to trickle in as as planned there are some of the arent optimization, even though more of that is going to go into 2026, and the optimization of our central American Ah <unk>.

Luca Barile: The cost advantage there that's starting to trickle in as planned. There's some of the yarn optimization, even though more of that is going to go into 2026, and the optimization of our central.American,

Luke Hannan: mix and network. So that, in conjunction with, you know, maintaining our sub 10% in terms of, of SG&A and good cost control, are really the drivers behind that guide of accretion of 50 basis points for the year.

Mix, it and network so that in conjunction with maintaining our sub 10% in terms of of SG&A and good cost control are really the drivers behind that guide of accretion of 50 basis points for the year.

Speaker 2: Okay, thanks. And for my follow-up here, Glenn, you alluded to there being roughly three-quarters of the sales growth coming from some of these new programs for 2025. Is that true for 2026 as well?

Okay. Thanks, and for my follow up here, Glenn you alluded to there being roughly three quarters of the sales growth coming from some of these new programs for 2025 is that true for 2026 as well.

Glenn Chamandy: We have very good visibility for 2026, yes.

We have very good visibility for 2026, yes.

Speaker 2: Okay, thank you very much.

Okay. Thank you very much.

Rachel Smith: Thank you. Our next question comes from the line of Mr. Vishal from National Bank. Sir, your line is open.

Thank you. Our next question comes from the line of Mr. Vishal <unk> from National Bank, Sir Your line is open.

Vishal Shreedhar: Hi, thanks for taking my question. With respect to the market weakness, in the past, Glenn, Gildan has used the market weakness as opportunities to pick up acquisitions related to some of these competitors that are struggling. How do you foresee that evolving in the year ahead?

Hi, Thanks for taking my question.

With respect to the market weakness in the past Glenn Tilton has used the market weakness as opportunities to pick up.

Physicians relate to some of these competitors are struggling how do you foresee that evolving.

<unk> ahead.

Glenn Chamandy: Well, I would say, look, right now what we're doing is we're taking share in the market. So, you know, it's a lot more advantageous to gain share than buy share. So, you know, we're taking advantage of, you know, the positioning, our low-cost manufacturing, and the weakness in the competitive landscape, and also, you know, I would say the consolidation of brands within the market. So all those things are allowing us really to drive on the existing brands. So what we've been able to do is actually, you know, create new brands. I mean, you know, Comfort Colors is probably the fastest growing fashion brand in the industry. I mean, it's taking share. I mean, you walk into a souvenir store today, you'll see Comfort Colors on every single one of those tables where you used to see fashion brands before.

Well I would say look at right now what we're doing is we're taking share in the market. So.

It's a lot more advantageous to gain share than by share. So we're taking advantage of the positioning of our low cost manufacturing and.

The weakness in the competitive landscape and also.

I would say the consolidation of brands within the market. So all of those things are allowing us really to drive on the existing brand. So what we've been able to do was actually create new brands I mean, our comfort colors is probably the fastest growing fashion brand in industry. I mean, its taking share I mean, you walk into a souvenir store today Youll see.

Comfort colors on every single one of those tables, where you should see fashion brands before now it's comfort colors, because that's the that's the place in market that is actually growing again, so is doing really well and now we've got additional product categories and the <unk> Pro and champions. So I think we're well positioned to be honest with you its keep taking share and staying focused.

Glenn Chamandy: Now it's Comfort Colors because that's the place and market that it's actually growing again. So AA is doing really well, and now we've got additional product categories in the All Pro and Champion. So I think we're well positioned, to be honest with you, to keep taking share and staying focused and executing on our plan. And look, we're not to say that we wouldn't look at something and, you know, at the right opportunity, but you know, right now I think we're very focused on delivering on our core strength the way we laid out.

And executing on our plan and look we're not to say that we wouldn't look at something in.

Hum.

Our rate opportunity, but right now I think we're very focused on delivering on our core strength global laid out.

Vishal Shreedhar: Okay. And there are indications that there's been a new exclusive distribution agreement between Haynes and S&S in North America. I wanted to get your comments on that and how it relates to Gildan's positioning there.

Okay and then.

There are indications that.

Theres been a new exclusive distribution agreement between our Hanes and finesse and in North America I want to get your comments on that and how it relates to.

Two kilotons positioning there.

Glenn Chamandy: Well, I think you're going to have to ask them that basically because I don't want to comment on, you know, their strategy and how they go to market. But as far as we're concerned, look, we're not really affected. I mean, you know, we're taking share. You know, we're growing our Activewear sales over this quarter by 12%. We're well positioned with our brand strategy. And innovation, look at it. I mean, the one thing that I can tell you is that our innovation pipeline is strong. And our innovation, you know, isn't even understood yet. And we're taking share. Because you got to remember, like in what's so unique about particularly the distributor side of the business is that the average order outside a distributor's warehouse is very small. It's only about $150. So it's like one at a time, two at a time, three at a time.

Well I think youre going to have to ask them that basically because I.

I don't want to comment on their strategy and how they go to market, but as far as we're concerned.

Look we're not really affected I mean, we're taking share.

We're growing our activewear sales over this quarter by 12%, we're well positioned with our brand strategy and innovation look at I mean, the one thing that I can tell you is that our innovation pipeline.

Our strong and our innovation.

Isn't even understood yet and we're taking share because you've got to remember like and what's so unique about particularly the distributor side of the business is that the average order outside of distributors warehouse is very small it's only about $150. So it's like one at a time two at a time through the time, it's a local electrician and.

Glenn Chamandy: It's a local electrician. And it takes time to really spread the word and to market our products and get people to understand the features and the value relationship between our products. So when you look at everything that we've done in terms of our innovation, it's not 100% understood yet. So it's continuing to, we're continuing to market. I mean, if you were at the trade show, you can saw how we laid out our booths and we're trying to explain to consumers and then users about our product. So that's a constant opportunity for us to continue taking share. At the same time, we have other innovations that are continuing to come out. So investing in our vertically integrated low-cost manufacturing is allowing us in all of our markets to become the market leader.

And it takes time to really spread the word into market our products and get people to understand the features and the value of the relationship between our products. So when you look at everything that we've done in terms of our innovation is not 100% understood. Yet so it's continuing to more we're continuing to market. I mean have you ought to trade show you can saw how we.

How we laid out our booths and were trying to explain to consumers and end users about our products. So that's a constant opportunity for us to continue taking share at the same time, we have other innovations are continuing to come out so investing in our vertically integrated low cost manufacturer is allowing us in all of our markets to become the market leader.

Glenn Chamandy: And you know, this is really, I would say, a differentiation between where Gildan might have been three, four, four, five years ago and where we're going today is we're investing heavily and dealing in terms of innovation to drive share and separate ourselves from the competition that they can't replicate what we have, which just gives us a competitive advantage. And that's a proof in our pudding with the, you know, the type of growth we had in this quarter.

And this is really I would say a differentiation between where gilda and might have been 344 or five years ago, and where we're going today is we're investing heavily in.

Dealing in terms of innovation to drive share and separate ourselves from the competition that they can't replicate what we have which just gives us a competitive advantage and that's the proof in our putting with the type of growth we had in this quarter.

Vishal Shreedhar: Thank you.

Thank you.

Rachel Smith: Thank you. Our next question comes from the line of Mr. John from Scotiabank. Sir, please go ahead.

Thank you. Our next question comes from the line of Mr. John <unk> from Scotia Bank. Sir. Please go ahead.

Speaker 2: Thank you very much. Good morning. I wonder if you can give a sense of what those capacity increases in Central America might cost. You have your CapEx guidance for this year, of course, but wondering if we should expect maybe a step up in future years or do these expansion efforts come at the low enough level of capital spending that this is part of fairly normal course CapEx?

Thank you very much good morning.

I Wonder if you gave a sense of what those capacity increases in Central America might cost you have your capex guidance for this year of course, but I'm wondering if we should expect maybe a step up in future years or do these expansion efforts come at a low enough level of capital spending that that business.

Part of fairly normal course capex.

Glenn Chamandy: Yeah, well, look, we're going to live within our CapEx guide for sure, number one. And you know, because look at the, there's no big infrastructure to put in because we're actually expanding in the existing facilities that already have all the infrastructure in place. So, you know, basically we've got 50 machines, you put five more machines in. I mean, it's as simple as that. So we've got space in our facilities. We relayed out some of our, you know, our plants basically to allocate the more capacity. And that's what we do best, right? So I think, look, it's a minimal investment for a good return because not only is it going to give us incremental revenue stream, but it's also going to come at a much more advantage cost structure because we're running obviously more capacity through the same four walls.

Yeah, well look we're going to live within our Capex guide for sure are number one in because look at the there is no big infrastructure to put in because we're actually expanding in the existing facilities that are already have all the infrastructure in place so base.

Basically we've got 50 machines, you put five more machines and I mean, it's as simple as that so we've got space in our facilities, we re laid out some of our.

Our plan basically to allocate more capacity.

And that's that's what we do best right. So I think look at it.

It's a minimal investment for a good return because not only is it going to give us incremental revenue stream, but it's also going to come at a much more advantaged cost structure, because we're running obviously more capacity through the same four walls. So it's a win win for us and.

Glenn Chamandy: So it's a win-win for us and it's a good use of capital. We also have, you know, like we still have the capabilities and in our guide for our next three years, we actually included, you know, to build out the plan to second phase of our Bangladeshi facility. That's also included in, you know, maintaining our 5% of sales and our CapEx. So that's still in our plans. You know, we're going to obviously just wait out until we make sure that we're still well positioned because we don't know where the wind will blow after these tariff situations play out. That's one of the reasons why we're also expanding in Central America because we have probably a little bit better understanding of what's going to happen in this region.

It's a good use of capital. We also have like we still have the capabilities and in our guide for next three years, we actually included.

To build out the plant the second phase of our Bangladeshi facility. That's also included in maintaining our 5% of sales in our our Capex. So that's still in our plans.

We're going to obviously just weighed out until make sure that.

We're still well positioned because we don't know where the wind will blow. After these tariffs situation plays out that's one of the reasons why we are also expanding in Central America, because we have probably a little bit.

We're understanding what's going to happen in this region.

Glenn Chamandy: But once we see, you know, over the next month or two and we get good color on Bangladesh, I mean, our plan is to also continue to develop in that region as well.

But once we see over the next month or two and we get good color on Bangladesh I mean, our plan is to also continue to develop in that region as well.

Speaker 2: Okay, thank you for that. And then on international markets, I wonder if you could add some color here on the macro picture, which is what you'd referenced in the press release. It's such a sizable divergence from the US, and I wonder what you attribute that to. Is there something specific to Gildan's international customer base or product set, and how do you expect that segment to perform in the second half?

Okay. Thank you for that and then on international markets I Wonder if you could add some color here on the macro picture, which is what you'd referenced in the press release, it's such a sizable divergence from the U S and I Wonder what you attribute that to is there something specific to <unk> international customer base or.

<unk> said and how do you expect that segment to perform in the second half.

Glenn Chamandy: Well, I'll just start with the first part of the question, maybe in a chuckle answer to the rest, but I would say, look, at the one thing you have to keep in mind is that our international businesses are relatively smaller in size just because of the way the markets function, right? I mean, you know, t-shirts, for example, in the US are screen printed and sold to consumers at a very inexpensive cost structure where in Europe the cost of, you know, printing and reselling shirts is much more expensive in countries like Germany and France, etc. So just the market dynamics aren't the same. And you know, we expect that when you look at our international sales, which we guide it to over 25 to 27 at the end of the period, our international revenue should be around, you know, 10% of our Activewear sales.

Well I'll just start with the first part of your question, leaving them Chuckle answer the rest, but I would say look at the the one thing you have to keep in mind is.

At our international.

<unk> businesses are relatively smaller in size just because of the.

The way the market's function right I mean T shirts for example in the U S. Our screen printed.

And sold to consumers at a very inexpensive cost structure, where in Europe the cost of.

Printing and resale insurance is much more expensive.

Countries, like Germany, and France et cetera. So there's just the market dynamics aren't the same.

And we expect that when you look at our international sales.

We guided to over 25% to 27 at the end of the period our international.

Revenue should be around.

10% of our activewear sales so just keep that in mind, because that's that's a reflection more of the size of the market really then it is our ability to take the market. So we're equally as positioned in those markets. As we are in the North American market, we may not have as much market share.

Glenn Chamandy: So just keep that in mind because that's a reflection more of the size of the market really than it is our ability to take the market. So we're equally as positioned in those markets as we are in the North American market. We may not have as much market share because the market is a little bit more fragmented, but overall we've got the same positioning. And Chuck will talk about the nuances and today.

Because the market is a little bit more fragmented, but overall, we've got the same positioning.

Chuck will talk about the nuances.

Speaker 2: Okay, thanks, Glenn. Yeah, I mean, I think as we look at the international markets, I think some of it Luca covered in his comments, but you know, it was a little lower than we expected. I mean, the UK is, I mean, we've seen economically challenges in the UK globally. Everybody can see it. And so we did see some challenges there and a little lower than expected. But really, when you think about year-over-year comps, we were comping two things that, one that Luca called out and one that we didn't. And one was Latin America, which he mentioned with, you know, the Mexico election last year. And that always runs up demand. But also, we launched our Style 3000 last year into Europe. So during Q2, and so you kind of have some load in there.

Okay. Thanks, Glenn.

As we look at the international markets I think some of it Luca covered in his in his comments, but.

It was little lower than we expected I mean, the U K is.

I mean, we've seen economically challenges in the U K.

Globally, our everybody can see it and so we did see some challenges there in more lower than expected, but really when you think about year over year comps. We were comping two things that are one that luka called out and one that we did in one was Latin America, which you mentioned with the Mexico election last year and that always runs runs up demand, but also.

We launched our style 3000 <unk>.

Last year into Europe. So during Q2, and so you kind of have some load in there.

Speaker 2: And so we, you know, we're still very happy, as Glenn said, with our international business. And a matter of fact, if I look at Q3, POS has significantly improved in the first part of Q3. So it's looking good there. And we're very comfortable as we look at that three-year target and saying that international sales will represent 10% of Activewear sales. I think we're very comfortable with that target going forward. Okay. I appreciate the color. Thank you.

And so we.

We're still very happy as Glenn said with our international business and matter of fact, if I look at Q3.

POS is significantly improved in the first part of Q3. So it's looking looking good there, but we're very comfortable as we look at that three year target and saying that international sales will represent 10% of activewear sales I think we're very comfortable with that target going forward.

Okay I appreciate the color. Thank you.

Rachel Smith: Thank you. Our last question comes from the line of Mr. Chris from Desjardins. Sir, please go ahead.

Thank you our last question comes from the line of Mr. Chris They jargon Sir Please go ahead.

Vishal Shreedhar: Oh, thanks very much. And sorry about earlier. Glenn, I know everything is still very fluid, but if tariffs in Bangladesh were to revert to the high rate of 35%, it sounds like the plan is to shift the production of ring spun back to Central America. And if that's the case, how quickly will you be able to fill out the unused capacity in Bangladesh? And would that have some impact on margins in the near term?

Oh, thanks, very much and sorry about earlier.

Claim that I know everything is still very fluid, but if tariffs in Bangladesh went to revert to the high rate of 35% is it sounds like the plan is to shift the production of ring spun back to Central America and if that's the case how quickly will you be able to fill out the unused capacity in Bangladesh and would that have some impact on margins in the near term.

Glenn Chamandy: What I said earlier is that, you know, half of the capacity that we're currently, which we didn't, we started the year, we optimized our plants by product category. Okay, so that's one. But you know, since the tariffs have come in, what we've done is we've basically, you know, shifted the volumes that are supporting our international sales, Canada, Europe, Japan, Australia, China, all of that product is being produced today in Bangladesh, which is, you know, just slightly more than half of the volume. The remaining volume is basically being sold in, you know, in ring spun type products, and it's coming back to North America. We have the ability to, you know, to repurpose the production from that plant and and show it in geographical regions that basically allow us to mitigate the tariff impact.

What I said earlier is that half of the capacity that good.

Currently, which we did and we started the year, we optimize our plants by product category. Okay. So that's one but no sense of tariffs would come in what we've done is we basically.

Shifted the volumes that are supporting our international sales, Canada, Europe, Japan, Australia, China all of that product is being produced today in Bangladesh, which is.

Just slightly more than half of the volume the remaining volume is basically being sold in.

Ring spun type products is coming back to North America.

We have the ability to to repurpose the production from that plant in and show it in geographical regions that basically allow us to mitigate the tariff impact. So we're basically I would say that we've got a good handle on tariffs.

Glenn Chamandy: So, you know, we're basically, I would say that, you know, we've got a good handle on tariffs. I think we're well positioned. We're also using US cotton in Bangladesh as well. So that's another advantage. So the part that we're actually bringing back to this hemisphere is probably not any worse tariff than what we're producing today in Central America. So we've got a very good positioning on where we are today. So now we'll wait and see what happens because, you know, right now Bangladesh has got a 10% tariff. You know, will they be tariffed at a higher rate? You know, we'll adjust these things as we go forward. But we've got, again, a lot of flexibility in our operations. And, you know, we're very comfortable with our positioning as we go forward.

We are well positioned we're also using U S cotton in Bangladesh as well. So that's another advantage. So the part that we're actually bringing back to this hemisphere is probably not any worse.

Tariff than what we're producing today in Central America. So we've got a very good positioning.

Positioning on where we are today. So now we will wait and see what happens because right now Bangladesh has got a 10% tariff.

Will they be.

Tariffs at a higher rate in the world just these things as we go forward, but we've got again a lot of flexibility in our in our operations.

And.

We're very comfortable with our positioning as we go forward.

Vishal Shreedhar: Okay. No, thanks for the clarification. And my second question, and maybe this one is for Luca, even though you've looked at your EPS guidance range, you know, still fairly wide with half a year to go, which is understandable given all the macro uncertainties. And I just wanted to get a sense of what are some of the key differences between the low end and the high end of your EPS guidance?

No. Thanks for the clarification and my second question and maybe this one is for Luca even though you've looked at you narrowed your EPS guidance range.

Still fairly wide with half of Utica, which is understandable given all the macro uncertainties and I just wanted to get a sense of what are some of the key differences between the low end and the high end of your EPS guidance.

Luke Hannan: Yeah, thank you for your question, Chris. So again, when you look at the guide, first of all, we're pleased with the performance so far. As I articulated earlier in the call, I think it all starts with the market assumption. Last time, you know, we gave the market assumption supporting the guide was that the market would be flat to down low single digit. Now it's more to down low single digit, even though there's sequential improvement in the market over the year. And then when you take a look at the EPS guidance that we provided, again, we took a balanced approach, right? There's some puts and takes. If you look at things like that would be accretive, there's more share gains that potentially we can go and get further wins and so forth.

Yes. Thank you for your question, Chris So again when you look at the at the guide.

First of all we're pleased with the performance so far as I articulated earlier in the call I think it all starts with the market assumption last time, we gave the market assumption supporting the guide was.

The the market will be flat to down low single digits now it's more to down low single digit even though there is sequential improvement in the market over over the year.

And then when you take a look at the at the EPS Guide.

Our guidance that we provided again, we took a balanced approach right. There are some puts and takes.

If you look at things like that that would be accretive theres more share gains that potentially we can go and get further wins and so forth and then on the on the risk and you have slowed down and more slowdown in general demand or less of a quick recovery. So there's there's puts and takes we know we're cautiously optimistic on that guide.

Luke Hannan: And then on the risk end, you have, you know, slow down in more slow down in general demand or less of a quick recovery. So there's puts and takes. You know, we're cautiously optimistic on that guide, but we're comfortable with that guide. And that all starts with the top line, the consistent margin profile making its way down to the EPS range that we've now given of 340 to 356. So hopefully that helps.

We're comfortable with that guide.

And and that all starts with the top line the consistent margin profile, making its way down to the EPS. The range that we've now given of $3 40 to $3 56, so hopefully that helps.

Vishal Shreedhar: Okay. No, it is. Thanks very much and all the best.

Okay. Thanks.

Thanks, very much and all the best.

Luke Hannan: Thank you.

Thank you.

Rachel Smith: Thank you. This concludes our question and answer session. I will now turn the call over to Jessy for closing remarks.

Thank you. This concludes our question and answer session I will now turn the call over to Jesse for closing remarks.

Junine: Thank you. We just would like to thank everyone for joining us and attending our call today. And we do look forward to speaking with you soon. Have a great day.

Thank you just would like to thank everyone for joining us and attending our call today and we look forward to speaking with you soon have a great day.

Rachel Smith: This concludes today's conference call. You may now disconnect.

This concludes today's conference call you may now disconnect.

Okay.

Okay.

Yes.

Yeah.

[music].

Yeah.

Jessy Hayem: Did you get off of work and we meet down at our spot? We had a panty over the view of parking lots. It was two for one and four for two at Christmas lights in the middle of June. All hung up like I was on you. I said, "Hey baby, do you want to come over?" You say no and then you move in closer. Next thing I know, you were in my t-shirt right there. Your hair messed up.

You may now ask.

Bye.

Danny.

Mark.

Yes.

Careful cost.

<unk>.

Yeah.

<unk>.

Let's see.

Do you want to come along.

Sure.

Okay.

<unk>.

Next thing I know.

Yeah.

Yes.