Good day, ladies and gentlemen, and welcome to the HanesBrands' Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your touchtone telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I'd now like to hand the conference over to your speaker today, T.C. Robillard, VP of Investor Relations. Please go ahead. Good day, everyone, and welcome to the HanesBrands Quarterly Investor Conference Call and Webcast. We are pleased to be here today to provide an update on our progress after the third quarter of 2023. Hopefully, everyone has had a chance to review the news release we issued earlier today. The news release, updated FAQ document, and the replay of this call can be found in the investor section of our hanes.com website. On the call today, we may make forward-looking statements either in our prepared remarks or in the associated question-and-answer session. These statements are based on current expectations or beliefs and are subject to certain risks and uncertainties that may cause actual results to differ materially. These risks include those related to current macroeconomic conditions, consumer demand dynamics, our ability to successfully execute our strategic initiatives, including our Full Potential transformation plan, the Champion Performance Plan, and our evaluation of strategic alternatives for our global Champion business, our ability to deleverage on the anticipated timeframe and the inflationary environment. These risks also include those detailed in our various filings with the SEC, which may be found on our website as well as in our news releases. The company does not undertake to update or revise any forward-looking statements which speak only to the time at which they are made. Unless otherwise noted, today's references to our consolidated financial results and guidance exclude all restructuring and other action-related charges and speak to continuing operations. Additional information, including a reconciliation of these and other non-GAAP performance measures to GAAP, can be found in today's news release. With me on the call today are Steve Bratspies, our Chief Executive Officer, and Scott Lewis, our Chief Financial Officer. For today's call, Steve and Scott will provide some brief remarks, and then we'll open it up to your questions. I'll now turn the call over to Steve. Thank you, T.C. Good morning, everyone, and welcome. Last quarter, we walked through an assessment of our strategy and how we are continually pressure testing it, looking at what's working, where we need to improve, adapting our plan to match the near-term realities of the operating environment, as well as looking at additional options to enhance shareholder value. As we assess our progress to date and look at the path forward, we've outlined four drivers to unlock shareholder value creation. One, return gross margin and operating cash flow to historical levels. Two, pay down debt. Three, reignite our innerwear business. And four, regain momentum and refocus our Champion business, which now includes an evaluation of strategic alternatives. As it relates to the first three drivers, when we came into the year, we spoke about our expectations for a muted consumer demand environment, which we've seen pressure the top line. However, despite this expectation, we laid out several key performance metrics with specific goals to track our progress throughout the year. In the third quarter and year to date, as a result of the team's ongoing focus and efforts, we have made meaningful progress across each of these metrics, and we remain on track to achieve our year-end goals despite the increasingly challenged sales environment. Specifically, adjusted gross margin increased 190 basis points sequentially and 100 basis points over prior year, ahead of our expectations. With visibility to input costs on our balance sheet, we're on track to exit the year with adjusted gross margins in the high 30% range. We reduced inventory 17% sequentially and 29% compared to prior year as we continued to implement and build our capabilities around inventory management, demand planning, as well as SKU discipline and lifecycle management. We've generated nearly $290 million of operating cash flow year to date and remain on track to deliver approximately $500 million for the full-year. We paid down another $144 million of debt in the quarter and nearly $270 million year to date, keeping us on track to pay down more than $400 million of debt for the full-year. In terms of our innerwear business, we've regained momentum as we continue to execute our strategy. We're delivering consumer-led innovation, investing behind our iconic brands, and leveraging our competitive advantages to gain market share. While the total innerwear market was down 3% in the quarter, our innerwear sales were consistent with the prior year period as we gained market share, driven by younger consumer-focused innovation, permanent retail space gains, a successful back-to-school campaign, and better on-shelf availability as we leverage our data analytics capabilities to help our retail partners improve sales and working capital efficiency. Touching on our innovation, we're seeing strong consumer response to our new products, and our pipeline is now full, providing us visibility to new product launches through 2025. In the quarter, we saw continued success of our Hanes Originals line, which is not only driving market share gains, it's also increasing our penetration with younger consumers. In Australia, we launched an anti-chafe innovation within our Bonds brand, which is off to a strong start, particularly in women's. Last month, we launched M by Maidenform across channels to again capture younger consumers with new, modern designs and colors... We're encouraged with the momentum in our innerwear business, and we believe we're well positioned to continue to gain market share and improve margins. Turning to our global Champion business. While we continue to experience near-term top-line challenges, including the difficult consumer environment, we are progressing on a number of strategic initiatives designed to build brand health, recover top-line momentum, and drive long-term profitable growth. Since our last call, we announced that we're evaluating strategic alternatives for that business. We've made significant structural improvements to Champion, such as segmenting and streamlining our supply chain, establishing globalized product design, as well as implementing a new disciplined channel segmentation strategy. These improvements have highlighted an even greater distinction between our innerwear and activewear businesses. This has created the opportunity for us, in conjunction with the board, to evaluate options for the global Champion business that could accelerate shareholder value creation. While still very early in the process, we continue to evaluate the right path forward as we receive strong initial interest from a broad group of global partners. We do not intend to provide continual updates on this process. However, as always, we'll be transparent and update you as appropriate when there is news to share. Irrespective of the outcome of this evaluation, we are leaning into and executing our detailed Champion plan for product, marketing, distribution, and operations. We remain highly confident and committed to reaching the significant global potential of the brand. During the quarter, we completed several strategic actions in the Champion business related to inventory cleanup, store exits, and operational streamlining that Scott will speak to in more detail. In addition, we continued our efforts to position Champion for growth by improving our product offering and channel mix, driving our channel segmentation strategy, and working to strengthen Champion's brand position with new marketing ahead of the launch of our fall/winter 2024 product line, which is our first global line from the new team. In fact, as we conduct our account meetings for our fall/winter 2024 line, we've received consistent positive reviews, particularly around the elevation of the product and our focus and connectivity to the brand's heritage. We believe we have opportunities to further increase our distribution in key channels. We're also successfully reigniting brand heat, driven by our good progress with pinnacle product offerings and accounts. While small in volume, these programs can generate a big and meaningful brand halo effect. Success in this channel is a leading indicator. Product being purchased by the most influential and engaged consumers over time leads to wider consumer desire and ultimately drives distribution opportunities in larger volume accounts. To that end, we launched successful collabs with key accounts, driving brand awareness and increased brand interactions with consumers, and we're encouraged by our robust calendar for additional future collabs. Small back-to-school product offerings at two key specialty accounts in the U.S. drove strong double-digit sell-through rates, an indication that our new product direction is resonating with consumers. We're seeing space gains and increased order backlogs within pinnacle accounts around the world, driven by our new brand and product vision. We're seeing a meaningful uptick in brand consideration among the key 18- to 24-year-old demographic, driven by our new brand campaign. We're confident we're taking the right steps to drive the long-term success of Champion, and the initial green shoots we're seeing within our pinnacle accounts are encouraging. However, as previously discussed, it's going to take some time for these strategic actions to translate to the P&L. So in closing, we continue to make progress despite the challenging sales environment. We're seeing improvement across our total company key performance metrics. Gross margin and operating cash flow are returning to more historic levels. We're reducing inventory and costs, and we're paying down debt. In innerwear, we are gaining share. Our innovation is resonating, especially with younger consumers, and we're taking the right steps to drive Champion's long-term success while we continue to evaluate alternative value creation opportunities. And with that, I'll turn the call over to Scott. Thanks, Steve. I'm proud of our global team as they delivered further improvement on our key performance metrics while simultaneously continuing to transform the business. To be able to do this, given the prolonged consumer headwinds in the apparel category, demonstrates their ability to adapt to near-term challenges and take action by controlling the things that are within our control. We're making structural changes to our business model. We're positioning our brands for long-term growth. We're taking out cost and driving efficiencies that help free up growth-related investments, and we're strengthening our balance sheet. With the progress we've made today and our increased financial flexibility, we're confident in our ability to deliver continued margin and cash flow improvement and pay down debt. For today's call, I'll touch on the highlights from the quarter, our improved financial position, including the amendment to our credit facility, and then I'll provide some thoughts on our fourth quarter outlook. For additional details on the quarter's results and our guidance, I'll point you to our news release and FAQ document. As expected, the global macroeconomic environment remained challenging, which continued to pressure sales. For the quarter, net sales were $1.5 billion, a decline of 9.5% versus prior year or 9.3% on a constant currency basis. Touching briefly on sales by segment, in U.S. Innerwear, segment sales were consistent with prior year and in line with our expectations. Despite continued softness in apparel spending, we continue to gain market share across the men's, women's, and socks categories.... In particular, we saw strong performance in our women's business in the quarter. This strength was led by the continued positive consumer response, particularly younger consumers, to our Hanes Originals products, as well as the launch of our M by Maidenform innovations. Looking at U.S. Activewear, third quarter sales decreased 17% compared to last year, which was essentially in line with our outlook for a mid-teens% decline. This was driven by continued category headwinds in the quarter, including soft consumer demand and excess channel inventory. In addition, Champion sales performance reflected the expected short-term impact from the continued strategic actions we're taking to drive stronger brand health through a more disciplined product and channel segmentation approach, a shift in mix, and changes to our assortment. We continue to improve Champion's operations globally, and as Steve highlighted, we're encouraged by the initial green shoots. But we also recognize that given the retail calendar lead times within the activewear category, it will take a few more quarters before we begin to see the impact of our strategic actions translate to the P&L. And with respect to our international segment, constant currency sales decreased 11%. In Australia, which is our largest international market, the previously discussed macroeconomic headwinds continued to pressure consumer demand in the quarter. The segment sales performance was below our outlook for a high single-digit decline, driven primarily by two markets. In Europe, wholesaler ordering was even more cautious than expected, and in Japan, while sales increased at a low double-digit rate, the growth was below our expectation as travel and tourism in the region recovered at a slower pace than expected. Turning to margins, adjusted gross margin of 35.5% was above our expectation. This represents an increase of 190 basis points sequentially and 100 basis points over prior year. The year-over-year improvement was driven by the combination of factors, including the overlap of last year's manufacturing time out cost, benefits from select pricing actions, and our cost savings initiatives, which more than offset the impact of product mix, as well as the continued but diminishing headwind from input cost inflation. With respect to adjusted SG&A, expenses decreased $15 million as compared to last year. The lower expense was driven by the combination of cost savings initiatives, disciplined expense management, and lower variable expense. As a percent of sales, SG&A expense increased 160 basis points over prior year, as the benefits from our cost savings and cost control initiatives were more than offset as we overlapped last year's variable compensation benefit and experienced deleverage from lower sales. This resulted in an adjusted operating margin of 9.5% for the quarter, which was near the high end of our outlook. Looking at the remainder of the P&L, interest and other expenses, tax expense, and earnings per share were all broadly in line with our outlook for the quarter. In terms of restructuring charges in the quarter, the $3 million of costs associated with our transformation strategy was below our outlook of $10 million. In addition, given the continued headwinds in the activewear category and our evaluation of the global Champion business, we accelerated and enhanced several strategic actions geared towards improving Champion's brand position, regaining momentum ahead of the launch of our first global product line from the new team, and positioning the business for long-term profitable growth. In the quarter, the $74 million of Champion Performance Plan-related actions included inventory write-downs. With a new brand direction, we're executing a more disciplined channel and product segmentation strategy, shifting our mix and improving our assortment, which is driving the decision to clean up discontinued programs. The actions also include store exit costs as we work to elevate our international retail experience and profitability, and initiatives we're taking to further streamline operations, lower costs, and position the brand for a higher level of growth-related investment. Turning to the balance sheet and cash flow, we continue to strengthen our balance sheet and increase our financial flexibility as we reduced inventory, paid down debt, increased liquidity, as well as amended our credit facility. We saw further improvement in our inventory position as we continued to implement and build our capabilities around inventory management. For the quarter, inventory decreased 17% sequentially and decreased 29% or $620 million as compared to last year. We're on track to achieve our goal and end the year with inventory below $1.5 billion. We generated $155 million of operating cash flow in the quarter, bringing year-to-date operating cash flow to $287 million. We're on track to generate approximately $500 million of operating cash flow for the full-year. We paid down $144 million of debt in the quarter and $270 million year- to- date. Our leverage was 5.5 x on a net debt to Adjusted EBITDA basis, which was below our third quarter covenant of 6.75 x. We remain committed to using all of our free cash flow to pay down debt, and we're on track to pay down more than $400 million of debt this year. All of this has led to our liquidity position increasing to approximately $1.2 billion at the end of the third quarter. Touching on our credit facility, we proactively amended the terms of our credit facility through the third quarter of 2025 to provide greater strategic financial flexibility as we remain focused on improving the core fundamentals of our business in a volatile, high interest rate economic environment. I want to be very clear, this action does not foreshadow EBITDA declines going forward. Quite the opposite. Given our input cost visibility and cost savings initiatives, we expect EBITDA recovery and growth in the coming quarters. Now, turning to guidance. We updated our full-year outlook to reflect the ongoing macroeconomic headwinds that continue to weigh on sales, as well as our visibility to gross margin improvement, our strong cost discipline, and the progress on our inventory reduction initiatives. With respect to sales, we now expect full-year sales of $5.7 billion. Of the $100 million adjustment to the low end of our prior outlook, approximately $40 million reflects a mark-to-market of three items. First, third quarter actuals account for $10 million. Second, FX for the second half of the year flipped from a tailwind in our prior guide to a headwind, which accounts for $15 million. And third, our prior guide included a full-year of sales from U.S. Hosiery. With the sale of this business at the end of the third quarter, it is no longer in our outlook, which accounts for $15 million. We updated our full-year adjusted operating profit to approximately $425 million, which is the low end of our prior guidance range. We continue to expect year-over-year gross margin improvement in the fourth quarter, and expect to exit the year in the high 30% range as we begin selling lower cost inventory and we anniversary last year's manufacturing timeout cost. We are also remaining vigilant with respect to SG&A expense, given the challenging environment. We reiterated our full-year operating cash flow guidance of approximately $500 million, given our profit outlook and our strong working capital performance, particularly within inventory. And we continue to expect to pay down more than $400 million of debt in 2023. With respect to other components of our full-year guidance, we expect interest and other expenses of approximately $310 million, tax expense of approximately $75 million, and adjusted EPS of approximately $0.12. So in closing, let me end with where I began. The team is doing a tremendous job. Over the last few years, we've accomplished a lot despite an extremely challenging apparel environment. Our innerwear business has returned to gaining market share. We're working to position our brands for long-term profitable growth. We've made structural changes to our business, including segmenting our supply chain. We're taking out costs and driving efficiencies to help free up growth-related investments. We've turned the corner on gross margin and are on track to return to historical levels as the inflation-related headwinds are behind us. Operating cash flow is returning to historical levels, driven by a much improved inventory position. We're paying down debt and strengthening our balance sheet, and we're exploring alternatives for our Global Champion business, all of which we believe positions us to drive shareholder value creation over the next several years. With that, I'll turn the call over to T.C. Thanks, Scott. That concludes our prepared remarks. We'll now begin taking your questions, and we'll continue as time allows. I'll turn the call back over to the operator to begin the question-and-answer session. Operator? As a reminder, if you'd like to ask a question at this time, please press star one, one on your touchtone telephone and wait for your name to be announced. To withdraw your question, please press star one, one again. Please stand by while we compile the Q&A roster. Our first question will come from the line of Jay Sole with UBS. Great, thank you so much. Maybe the first question, Scott, you touched on what changed in the guidance. You talked about macro, but if you could just dig in a little bit more and maybe elaborate on what the difference is between where you were guiding before and where you're, where you're guiding now, that'd be helpful. Yeah, sure, sure, Jay. Good morning. Appreciate your question. As you look at our fourth quarter guide, I think there's a few key takeaways. The important things we look at as we go into the fourth quarter is we're holding operating profit to the low end of the prior guide. We also reiterated the gross margin exit rate in the high 30% range. It's gonna be about 200 basis points over third quarter and around 300 basis points over last year. We reiterated our cash flow of $500 million, and we reiterated that we're gonna pay down over $400 million of debt. So we feel really good about the progress that we're making, for the first three quarters of the year, and we continue to expect those key metrics, for the full-year. We did adjust, sales down to, for the full-year, $5.7 billion. And around half of that is, points I mentioned in my prepared remarks about, just truing up for Q3 sales. FX, we were initially anticipating a tailwind that turned into a headwind for the fourth quarter. And then, the U.S. Hosiery business, we sold that business at the end of the third quarter. So we had previously had that in the full-year guide, so we took that out. So again, that's about half of that, decline. Okay, and I'm gonna ask one more. Steve, just curious if you can elaborate on how you're thinking about the strategic alternative strategy for the Champion business. I mean, you know, at what level do you think it's just worth to keep following the strategy and trying to improve the fundamentals versus, you know, maybe going another direction, and what it would take to go into another direction? That'd be helpful to know. Thank you. Yes. So good morning. In terms of the assessment, you know, it's early, so we're really just getting started. I'll tell you, there's been a lot of interest from a lot of different global partners, but, you know, more to come on that, and we'll keep you up in the loop as we go forward. In terms of the strategy, we feel good about the work that we're doing and where we're going, and we're confident that we're taking the right steps. Moving forward. And we've made a lot of progress, in terms of positioning the brand for growth, whether that's the product segmentation, channel segmentation work that we're doing, rebuilding brand heat. You know, we're starting to get a lot of momentum behind, you know, collabs. We just did one with Kith the other night at Madison Square Garden with the Knicks. So things like that are making a difference in the business. Pinnacle accounts are responding. We're getting good feedback on our fall/winter sell-in for next year. So, you know, we're building the fundamentals. It's not coming fast enough, and, you know, we wanna get to the PNL faster, and we realize that, but we think we have a really good handle on how to build this global brand and the actions to take. And I think we're doing the right things. I think the team is moving quickly. So, you know, we're gonna continue on the journey that we're on. We expect to deliver results. We expect fall/winter next year to start to turn the corner on the business. So we're still gonna have headwinds for a period of time, but we like what we're doing, and we think we're following the right approach. Okay. Sounds great. Thank you so much. Thanks, Jeff. Thanks, Jeff. Our next question will come from the line of Ike Boruchow with Wells Fargo. Hey, good morning, everyone. Two questions for me. Just on the innerwear business, when you look out into next year, are there any potential retail partners that you guys have where, besides destocking, there's any potential risk to more of a structural destock? Just there's been some chatter out there of certain types of retailers out there based on strength and issues that are out there that might be thinking about that. So I'm just kind of curious what your comment there would be. And then just on the balance sheet, so 5.5 x leverage today. I'm trying to go through the numbers for guidance, but the covenant does step down from, I think, 6.75 this quarter to 5.25, and then 5 in the next two quarters. Like, how are you guys thinking about... How are you thinking about that and your ability to kind of remain below the covenants that you guys have? Thank you. Sure. Good morning, Ike. Thanks for the question. In terms of your first one around, you know, structural destock or change in the industry, my short answer is no. I don't see that coming. And actually, you know, as I think about our business and the innovation that we're putting out into the market, the acceptance of that innovation has been really strong. And our customers have really leaned in with us and are taking that innovation on time, at scale. We're also gaining space even for our core base business, so we're continuing to ship to that rate. Obviously, we need to manage POS with shipments, and, you know, we work very closely with our partners to do that. But I feel like we've got really good momentum in this business. There's headwinds in the category, there's headwinds in the broader macroeconomic market. But as I think about the key initiatives that we're doing here around innovation, aggressively going to market and gaining space, I think we're in good shape, and I think we're gonna continue to see this business grow. I think, you know, our start from the beginning was reignite the brand, reignite innerwear, and I think we're, you're starting to see that happen. Yeah. Good morning, Ike. Thanks for your question. So on the covenants, and we actually just completed a new amendment of our covenants just in the last week. Some of the details are on the filing this morning in our earnings release. We'll also have more details in our 10-Q filing later today. So with that, factoring in that new amendment, we have plenty of cushion. And just a little bit of background on kind of our approach and thoughts around the amendment. The amendment was a proactive move given the challenging and dynamic environment and market that we're in. Really, as we were thinking about it, really three things drove the decision. One is about financial flexibility, right? Our number one priority continues is to invest in the business. We recognize the external environment is challenging. We wanna make sure we have the flexibility to make prudent investments behind the brands, technology, to make sure it allows us to go on the right path for growth. And then the other thing to remember, it's important with the covenant calculation, it's a last 12-month calculation, right? Which means we're dragging the inflation-driven margin pressure from this year into the next few quarters in the last 12-month calculation for EBITDA. And then just the last point on it, I would comment on, is the, we just make sure that we're protected. Given the uncertainty around the interest rates and the consumer environment, we wanna make sure we had plenty of cushion to navigate through the environment. Great. Thank you. Yeah, thank you. Our next question will come from the line of Paul Kearney with Barclays. Hey, good morning. Thanks for taking my question. Two questions. My first one is, I was hoping you can give us some guidance into the cash flow outlook into next year. Just trying to normalize, given the significant working capital inflow that you had this year, how do we think about working capital next year? Then I have a follow-up. Yes, sure, Paul, good morning. On cash flow, let me just step back and kind of talk about what we're seeing in 2023. To your point, really seeing great working capital benefit this year. Like I mentioned earlier, we reiterated our $500 million cash flow guidance for the year. Around two-thirds of that was working capital driven. Making great progress on inventory, down over $600 million year-over-year. We continue to expect, in fact, be a little bit below $1.5 billion as we finish the year on inventory. But there's more upside beyond that. As we go into next year, we anticipate we have additional working capital benefit that we can drive. And it's also important to remember from a margin perspective, as you go into next year, again, just using that exit rate of gross margin in that high 30% range, just using, consistent sales year-over-year, we're gonna take $200 million of cost out this year- over- year. So, it'll be a, a much more of a mix on the profit side than the working capital benefit. But again, we see both, really driving that. ... All right, thanks. And my second question is on the Champion business, and I know you, you've touched on the strategic actions, but I'm hoping for a little more detail on that. I guess, specifically, what are the changes within the product you're making, within the channel segmentation, and what are the changes within the assortment? Thank you. Sure. Yeah, thanks. Thanks for the question, Paul. So a little more detail on where we're going and how we're doing it. You know, we have a new team, new roadmap, and, you know, a new brand purpose, which are all kind of overlaying all of this. The key, the key in the areas you're talking about, so product segmentation, channel segmentation, you know, in a brand like this, you need to be really thoughtful about which product goes into which channels and how you manage that. We didn't do that particularly well in the past, okay? And we're cleaning that up, and we're fixing that, meaning, there's certain product that has to go to certain accounts, and there's other product that goes to other accounts. It sounds simple, but we weren't doing that particularly well, and that hurt us in the marketplace. The other thing with product is tying it more closely to the brand position, particularly the brand heritage, and you're starting to see a lot more of that. That's one of the real clear comments we've gotten in our fall and winter sell-in, is you're gonna see product that's more tied to the heritage of the brand, more uniquely Champion, that goes to market. And that's gonna be different than it's been recently, and it's being well-received, and it's gonna be a big difference. The other thing that we're working on is global product. You know, building global platforms. You know, this is a global brand. Between Europe and Asia and domestically, we have a really strong footprint around the globe, and we have a huge opportunity to build global platforms, whether that's product design, whether that's fabric platforms, which we're consolidating, reducing speed to market. All those things are making a really significant difference in how we're gonna show up in the marketplace. We're gonna manage this like a brand. We're gonna manage it like a global brand, and we're gonna lean in with marketing behind it. Our campaign of Champion, What Moves You, is being well-received. We're just getting started, but we're seeing traction with younger consumers, and the product's gonna match that, that campaign. So we're excited about where we're going. Lots of work to do. The team is grinding away, but we think we're working on the right things, and we think it's gonna make a difference for us as we go forward. Thank you. Thanks, Paul. Our next question will come from the line of Tom Nikic with Wedbush Securities. Hey, good morning, guys. Thanks, thanks for taking my question. I wanted to ask about the, you know, strategic alternatives for Champion. I guess I'm, I'm curious, you know, how intertwined is Champion with, you know, the supply chain, the manufacturing base, the systems and processes of the company, et cetera? Essentially, you know, how easy or difficult would it be to kind of detach Champion from the, the rest of the operation? Sure. Good morning, Tom. Thanks for the question. You know, it's really early in the process, obviously, so we'll see how it plays out over time, and obviously, we'll keep you looped in. The thing I would tell you is, we've been doing a lot of work over the last couple of years on segmenting our supply chain. I've been talking about that from the beginning, and that's both by product line, by brand, by type of flow, is really important, whether it's a fast-turn product or it's a long-term replenishment product. We've been doing a lot of work on dividing that up, segmenting it, creating new capabilities as we go forward. So a lot's been done there. Fundamentally, we do not anticipate a lot of dis-synergies if we were to move ahead with this type of process. It depends on, you know, whether we choose to go forward or not, but we feel like we can manage this very clearly. There's not a lot of dis-synergies in the business, and the supply chain is set up to manage any choice that we decide to make going forward. Understood. And, follow up on gross margin. So I know you, it sounds like you were pretty confident in exiting the year at the high thirties gross margin rate. I guess, you know, when we kind of think about, like, you know, the puts and takes of gross margin, like, are there other factors that could, you know, cause gross margin to come in worse or better than that? You know, discounting or currencies or anything like that that would cause the gross margin to deviate from that high thirties run rate? Yes. Yeah, thanks for your question on the gross margin. So we have a lot of good visibility with gross margin into the fourth quarter. Again, we talked about this earlier, that, you know, what's running through our supply chain today is those lower cost products in line with, you know, pre-pandemic gross margin levels. When you look at the fourth quarter, there's a couple of things to factor in. You know, one is from the inflation side. You know, we expect that going from a headwind to a tailwind is the inflationary cost. It's been a headwind for the first three quarters of the year, that actually flips over to a tailwind, about 150 basis points in the fourth quarter. So that's a big driver of the expansion in the gross margin. 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 a 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 gonna 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 confident that we're gonna be about, again, 200 basis points over the third quarter and 300 basis points over the last year. Understood. Thanks very much, and good luck the rest of the year. Thanks, Tom. Thank you. Our next question comes from the line of Carla Casella with JPMorgan. ... 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. Sure. Good morning, Carla. Thanks for the question. Yep. 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, you know, the market is tough around the globe, similar to the way it is here. You know, Europe came in a little bit less than we thought. You know, LatAm continues to be a strong growth opportunity for us. Asia's mixed. You know, Japan is, you know, growing really well, not actually as high as we thought it was gonna grow, but we're seeing good growth in Japan. In Australia, you know, they are really being pressured by inflation, and the pressures of interest 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 mixed shift towards wholesale, which creates a headwind for us. But international is one of our largest international market- or 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 perform 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 rate driven, I expect that business to recover very strongly and to continue to be a growth and profit driver for us. Okay, and is that business integrated with the U.S. at all, or is it a business that you're using for sharing best practices? Just wondering if that's a, you know, a core tied into the U.S. or not. Yeah, 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. She's doing a fantastic job, and what you're seeing is a lot more product design move back and forth between Australia and the States, whether that's our Total Support Pouch product, some of the Maidenform product, certain designs that they've used with Bonds we've 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. Okay, great. And can I just ask one follow-up question on your innerwear, 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 college, collegiate channel. Yeah, I'm not gonna break it out specifically by channel because we just 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, you know, by product line. So I think activewear is heavier than innerwear. We feel good, 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 tell you, activewear higher than innerwear. And, you know, we'll see how it plays out going into next year, but the retailers are certainly taking action as we are. Okay, thanks a lot. Our next question comes from the line of William Reuter with Bank of America. 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. So I don't see any risk of destock. You know, it's always a matter of trying to match POS with shipments, and I think we're doing a really good job with that. I personally think our retailers are doing a pretty good job of that. So from an innerwear perspective, I think we're good, and I think the destocking and 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. You know, 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 a work through the inventory that's in the market right now that will allow growth to return. Okay, and then just to follow up for me, it seems like the product segmentation is a pretty key component of the kind of returning the business to growth and being healthier. Will this be a pulling product out of channels, or a transition to different product in those channels? Clearly, you've got some cool stuff going on, like with Kith, that does have the halo effect that you described. But I guess I'm wondering whether off-price, for example, you will just be changing the product that goes there, or you will be reducing it? Yeah, good, good question. So think of it as a more disciplined management process. It's not necessarily about leaving this channel or that channel. It's about making sure that we're being very thoughtful and precise on which product goes where. We got a brand that plays really well in lots of different channels, whether that's all the way up in the pinnacle account or whether that's in off-price channel. But what we need to do is a better job of managing that, just like all of our competitors do. They're very specific on how they manage that, how they manage which product goes where. We're gonna just get a lot better at that than we've been in the past, and we think that's gonna open up a lot of opportunities for us. Makes sense. I'll pass it on. Thank you. Thank you, William. That concludes today's question and answer session. I'd like to turn the call back to T.C. Robillard for closing remarks. We'd like to thank everyone for attending our call today, and we look forward to speaking with you soon. Have a great day. This concludes today's conference call. Thank you for participating. You may now disconnect.