Gildan Activewear Inc. (NYSE:GIL) Q2 2023 Earnings Call Transcript

Brandon Cheatham: Got it. And how do things shift around as that comes online? Do you shift your underwear business over there kind of wholesale or is it really piecemeal depending on how these conversations go?

Glenn Chamandy: Well, we already make a lot of our underwear in Bangladesh today because we still have other operations there. So underwear is being made in that hemisphere today as well as a lot of our fashion shirts. So all of our incremental fashion, basics, underwear, all of our growth will be supported really by the development of Bangladesh as we move into the future.

Brandon Cheatham: Got it. And one more if I can. With the shift away from fashion more towards basics, are you able to shift what you’re manufacturing to kind of meet that demand? Like how quickly can you change things so that you don’t get over-inventoried in a category that isn’t selling through as well as you had hoped?

Glenn Chamandy: Well, our cycle time is five weeks, so it doesn’t take very long. I mean we’ve already adjusted all of our manufacturing. All of the products in which we manufacture if it’s a T-shirt, the fashion shirt, the basic shirt, they’re all made on the same machine. So we can adjust our equipment and in the case of our fleece where we make a hood or a crew. It’s all made in the same factories. There’s just less operations to make a crew than the hood. Sewing is a little more difficult to go from making more hoods than crews because it takes more labor to make this bigger hooded sweatshirt, it’s a lot easier going to make more crews to be perfectly honest with you. But we have lots of flexibility in our manufacturing.

Our cycle times are relatively short. We’ve adjusted our manufacturing to reflect all of these types of changes on a daily basis as we get POS from our customers and it goes to our planning groups. Our planning groups make the adjustment. And our manufacturing groups respond to whatever is being sold in the market. So none of that is really an issue for us. And as we’ve said before, look, we’re well-positioned. We have good visibility despite the fact that we’ve seen some of these mix changes, we’re going to be driving at the high end of our operating margins as we move into Q4 with our cotton position, and we’ve got a good visibility on our cost structure as we move into ’24 even with this type of mix. So we’re well-positioned and we’re excited about as we go into the future.

Brandon Cheatham: Got it. Appreciate it. Good luck guys. Thank you.

Glenn Chamandy: Thank you.

Operator: There are no further questions at this time. Ms. Jessy Hayem, I turn the call over back to you.

Jessy Hayem: Okay. Once again, we’d like to thank everyone for joining us this morning and we look forward to speaking to you soon. Have a great day.

Operator: This concludes today’s conference call. You may now disconnect.