[indiscernible] (0:20:42):
Chris Li: That’s helpful. Thank you, Rhod, and all the best.
Operator: Next question comes from Jay Sole with UBS. Your line is open.
Jay Sole: Great. Thank you so much. I’m just wondering if you can elaborate a little bit more on the ring-spun business in the quarter. It sounded like it was quite positive and there is some market share gains. Can you just maybe give us a little bit more idea of what you’re seeing in that business that’s driving the strong trends that you’re seeing for Gildan?
Chuck Ward: Sure, Jay. I think we continue to perform well in that market and we continue to take share. We have a quality of product at a good value price and we continue to see that we’re taking share for our competitors in that area. So as Glenn mentioned, we’re up double digits in that area and we’ll – I think we’ll continue to do that as we go forward.
Glenn Chamandy: And look we’re competing with competitors that have very high cost structures. And as we continue to reinvest in our low-cost manufacturing, we’re widening the gap in our cost position that will continue allowing us to continue taking more share. So we’re in a great position. We’re investing heavily in our low-cost manufacturing, particularly in our Bangladesh facility, which will be dedicated to 100% ring-spun type products and will be utilized to support all of our future growth. So we’re pretty confident that we’re going to continue to take share as we move into the future.
Jay Sole: Got it. Okay. And then maybe if I could ask one more, just on modeling the fourth quarter, is it possible just – can you tell us a little bit about how gross margin trends will continue to improve and sort of how you’re thinking about SG&A dollar growth in 4Q? Thank you so much.
Chuck Ward: Okay, Jay. If you look at gross margin and we look at how it’s going to evolve in Q4, we do see improvement. We saw improvement. Well, effectively, if you look sequentially from Q2 to Q3, we saw 170 basis points of improvement driven by the lower fiber costs. And we said that will be a tailwind into Q4, and very definitely we do see that. So, effectively, we see – we’ll see sequential improvement in gross margin as we move into Q4, as we continue to see those lower fiber costs. And, effectively, the tailwind that we’re going to see in Q4 is probably even stronger than what, effectively, we saw from a sequential basis between Q2 and Q3. If you look at SG&A, effectively, we do have our SG&A dialed in very well. We’ve got it well under control.
And I think if you look at, effectively, what we see, we would expect spending on a dollar basis to be pretty consistent sequentially with what we saw in Q3. So, overall, our operating margin is moving to the high end of that range, right? We’ve effectively been talking about that for some time, that we expected that to occur in the back half of the year. And we can see that coming. And, it effectively, will put us in a strong position in the fourth quarter, and then we’ll put us in a very strong position as we move into 2024. And, as Glenn said, we have good visibility on our cost structure, on our fiber costs, as we move into 2024 and so we do feel very good about how we are set up. So, high end of the range in Q4, and then as we move into 2024, we are going to continue to benefit from that as we move into the next year.
Operator: Our next question comes from the line of Mark Petrie with CIBC. Your line is open.
Mark Petrie: Yes, thanks. So, just to follow-up with regards to the de-stocking commentary, could you just talk a little bit about the behavior that you are seeing at distributors broadly, both around price and inventory levels?
Rhod Harries: Well, the price is pretty consistent, and so there is really nothing on price at the distributor level through the Q3. And inventory levels are in good shape. I mean, we anticipated a little bit more de-stocking, and, again, that’s one of the reasons why our sales were a little higher than we anticipated. But we also expect de-stocking in Q4, which is seasonally what happens. It’s the lowest quarter of the year as we move in, because typically distributors carry inventory in Q4 to service Q1 and both those quarters being the lower end of our quarters, it’s normal that we got de-stocking. So I think we’ve got it dialed in. The inventories are in very good shape. Service levels are good, and POS for us, is pretty strong. So I think we’ve got it pretty well laid out right now.
Mark Petrie: Okay, thanks. And based on your expectations for 2024 and sort of the macro environment and what you see for inventory levels at distributors today or are embedding in your guidance for Q4, would you expect de-stocking to be a headwind in 2024 or stable?
Glenn Chamandy: Mark, we do not expect de-stocking to be a headwind in 2024. We expect it effectively to have a stable environment. And, of course, if you look at 2022 to 2023, that was a big headwind for us in 2023, because we had all of that re-stocking that was occurring effectively in the first half of 2022, which was very difficult for us to comp in the beginning of 2023. That’s obviously why we saw the week of quarters in Q1 and Q2. Now we’ve got all of that behind us. And so we do see a very stable environment from an inventory perspective as we move into 2024 on the printwear side. And I would say that puts us in a very good position as we allow that POS and the market share gains to really just drive our performance.
Mark Petrie: Yes, got it. Helpful. Thank you. Second question, just with regards to the shelf space wins that you guys have had in retail in 2023, I am curious, just your views sort of on opportunities that you see in the market today for sort of continued momentum, just given how dynamics in the category have evolved and private label being a general winner. Thanks.
Glenn Chamandy: Well, we’re going to continue to leverage obviously our shelf space. Obviously we rolled those programs out, they were off to a late start, so we didn’t really get what we anticipated the full benefit of those programs in the rollout. So I think that maybe one positive thing as we move into 2024 as we really get the full impact of all the shelf space that we will have in 2024. And like anything else, we obviously obtain new programs in retail, and as well as with our GLB customers. So, overall, look, we are well positioned to move into 2024 with the full rollout of these underwear programs, some activewear wins in our GLB programs and continued taking market share as we move into 2024 in our wholesale, core wholesale business.
So overall, we’re still cautiously optimistic. But more importantly, like I said earlier, we’re going to continue to focus on what we control and that’s going to be our operating margins. And as we move into 2024, we’ve got great visibility on, maintaining really strong operating margins and strong free cash flow as we move into next year.
Operator: Our next question comes from the line of Vishal Shreedhar with National Bank Financial. Your line is open.
