You also have to factor in, and you remember last year, we took time out of our manufacturing facilities. In the fourth quarter, it was around 220 basis points headwind last year, so that’s a year-over-year benefit to us. So filling those two, again, gives us that confidence you’re going to see a really significant expansion in our gross margin from year-to-year. And then the last thing, just as the puts and takes, again, volume and mix will play into that. But all of that combined would kind of get you to a really good confidence that we’re going to be about, again, 200 basis points over the third quarter and 300 basis points over the last year.
Tom Nikic: Understood. Thanks very much and best of luck for the rest of the year.
Scott Lewis: Thanks, Tom.
Stephen Bratspies: Thank you.
Operator: Our next question comes from the line of Carla Casella with JPMorgan.
Carla Casella: Hi. Thank you for taking the question. I had some questions around the International business and specifically Australia. Can you just talk about is the International business almost all Australia at this point? And just kind of the trends in the market there?
Stephen Bratspies: Sure. Good morning, Carla. Thanks for the question. So let me just do a quick tour around the globe real quick, and then I’ll talk about Australia specifically. When you think about Q3, the market is tough around the globe, similar to the way it is here. Europe came in a little bit less than we thought. LatAm continues to be a strong growth opportunity for us. Asia is mixed. Japan is growing really well, not actually as high as we thought it was going to grow, but we’re seeing good growth in Japan. In Australia, they are really being pressured by inflation and the pressures of nterest rates right there. It’s a society where consumers are very highly leveraged individually. So that impacts consumer spending.
It drove lower traffic in our stores as well as there was a mix shift towards wholesale, which creates a headwind for us. But international is one of our largest international market, sorry, Australia is one of our largest international markets. I feel really good about that business. We have leading brand positions there with Bonds and Bras N Things. Those businesses performed extremely well. The brands are strong, strong consumer response, strong go-to-market capabilities. Once we clear the macro headwinds there, which are primarily, as I said, interest rates-driven, I expect that business to recover very strongly and to continue to be a growth and profit driver for us.
Carla Casella: Okay. And is that business integrated with the US at all? Or is it a business that you’re using for sharing best practices? Just wondering if that’s a core tied into the US or not?
Stephen Bratspies: Yes, great question. The answer is yes, particularly on things like product design. So Jane Newman, who used to actually be the leader of product design in Australia, is now our Global Innerwear Product Design Lead. He’s doing a fantastic job. And what you’re seeing is a lot more product design moved back and forth between Australia and States, whether that’s our total support pouch product, some of the Maidenform product, certain designs that they’ve used with Bonds we brought over and have launched inside of Hanes. So on a product basis, we are as integrated as we’ve ever been, and we’re getting a lot of good results out of that.
Carla Casella: Okay. Great. And can I just ask one follow-up question on your — you mentioned wholesale inventories. Can you give us a little more color by channel? Which channels might be a little bit heavy or light in inventories? I’m thinking mass versus department store versus like a collegiate channel.
Stephen Bratspies: Yes. I mean, I’m not going to break it out specifically by channel because we don’t get into that level of detail. What I would tell you is, it varies, and it varies by customer inside of channel. So not everyone is the same, and it also varies even by product line. So I think Activewear is heavier than Innerwear. We feel pretty good about our Innerwear position. And you can see that, the actions we’ve taken on our inventory to match it. But it varies and I would say Activewear higher than Innerwear. And we’ll see how it plays out going into next year. But the retailers are certainly taking action as we are.
Carla Casella: Okay. Thanks a lot.
Operator: Our next question comes from the line of William Reuter with Bank of America.
William Reuter: Good morning. My first question is a little bit of a follow-up on Carla’s question with regard to, is there any risk or channels that continue to destock? Could this continue to be a headwind? I feel like you had felt like the majority of that was done, but with sell-through being soft across the industry, I was wondering if that’s changed your perspective.
Stephen Bratspies: So I don’t see any risk of destock. It’s always a matter of trying to match POS with shipments, and I think we’re doing a really good job with that. And I think our retailers are doing a pretty good job of that. So from an Innerwear perspective, I think we’re good. And I don’t — I think the destocking in that — those events that you saw a year ago, I think that’s all past us. And now it’s just about managing the business tightly. We partner with the retailers to do that. In the Activewear space, there’s still a lot of inventory in the channel. And there’s work still being done to push that through. That’s not new to this time. We’ve been dealing with that for a while. And it’s definitely a headwind on the business. But I don’t think it’s a destock in Activewear. It’s work through the inventory that’s in the market right now that will allow growth to return.
