Good day, ladies and gentlemen, and welcome to the Q1 2012 Gildan Activewear Earnings Conference Call. My name is Pamela, and I'll be the lead operator today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to your host for today, Ms. Sophie Argiriou, Director of Investor Communications. Please go ahead.

Thanks, Pamela. Good afternoon, everyone, and thank you for joining us. Earlier, we issued our press release announcing our earnings results for the first quarter of fiscal 2012 and our interim shareholder report containing management's discussion and analysis and consolidated financial statements. These documents will be filed with the Canadian Securities Regulatory Authority and the U.S. Securities Commission, and are also available on our website at www.gildan.com. Joining me on the call are Glenn Chamandy, our President and Chief Executive Officer; and Laurence Sellyn, our Executive Vice President and Chief Financial and Administrative Officer. Laurence will be providing you with a brief overview of our first quarter financial results and our business outlook. After which, we will open the call to questions. Before we begin, I would like to remind everyone that certain statements included in this conference call may constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements 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 Authority that may affect the company's future results. I would now like to turn the call over to Laurence.

Good afternoon. This afternoon, we reported our results for our first fiscal quarter, which were in line with our guidance provided in December. We also reconfirmed our sales and EPS guidance for the full 2012 fiscal year, and initiated guidance for the upcoming second quarter of the fiscal year. This was our first quarter for which we have provided segmented business unit reporting. We are now managing our screenprint and retail divisions as separate operating divisions with decentralized accountability for operating income and return capital. The 2 segments will be reported as Printwear and Branded Apparel instead of screenprint and retail. In addition, this is our first quarter of financial reporting under International Financial Reporting Standards instead of Canadian GAAP. This evening's press release includes quarterly and annual sales and operating income for fiscal 2011 by operating segment. Also, we have made available on our website our fiscal 2001 quarterly and full year results under IFRS. There are no material adjustments to our fiscal 2011 financial statements due to the changeover to IFRS. The only adjustment to highlight is that the transaction cost for the acquisition of Gold Toe Moretz, which were incurred in fiscal 2011, are reported as a charge against earnings under IFRS and not capitalized as goodwill, which was the accounting treatment last year under Canadian GAAP. Our net loss for the first quarter was $0.38 per share compared with our December forecast of approximately $0.40 per share. Net selling prices for Printwear were slightly higher than projected in December, due to lower-than-projected promotional discounting in the month of December. The loss in the first quarter compared to adjusted net earnings of $0.30 per share in the first quarter of fiscal 2011. The first quarter loss was due to the following factors: Number one, we continued to…

Thank you, Laurence. This concludes our formal remarks. [Operator Instructions] Pamela, we're ready to take questions.

[Operator Instructions] Our first question comes from Martin Landry from GMP Securities.

Could you remind us of what kind of operating margin -- operating income margin you're targeting in your Branded Apparel segment in the long run?

Well, I think, obviously, our operating margins, what we said is that we anticipate getting operating margins similar to those of wholesale in the long run. But obviously, we're investing now into the future, so that would take us some years to build, to get up to the mature level of our wholesale business, but that would be our goal.

So am I correct to assume that your Printwear business is currently running at 25% operating income margin. So is that what you're targeting for your Branded Apparel?

That will be the goal.

And second question, where do you stand with regards to your hedge for cotton. Are you fully hedged for fiscal '12? And if so, at what price?

I mean, obviously, information in our cotton purchases are very sensitive competitively, Martin. What we've said to you previously is that our average quarterly cost of cotton peaked at around $1.60 per pound in Q4 and that, that peak level of cotton is currently assumed to continue until early Q3. And after that we're assuming that our cotton costs will reflect the current cotton futures. Although we still have our balance of cotton to cover in Q4.

So you're still undergoing hedges?

We are still -- we still have some open cotton in Q4, yes.

Our next question comes from Nicole Shevins from Goldman Sachs.

I wanted to see if you could give us an update on the price declines that you took in 1Q. I think, so far, the price declines were mainly in T-shirts. Are there any other categories that you plan to take prices down on or were all the price declines taken so far? And then as a follow-up, we've heard it out some new promotions going on in the last few weeks in the screenprint channel, so just wanted to see if you could talk to that at all?

As far as the price declines, we've taken obviously, price declines in T-shirts, as well as fleece. And that's what's been factored in to our forecast. And then -- which is part of our deval. And as far as the promotional activity in the marketplace today, it's in line, really, with what we projected. Even though we brought our prices down to a lower level as a list price, we've always assumed in our forecast in that there'll be promotional activity. And the pricing that's currently out in the market is basically -- has been -- is in our forecast. And if it deteriorates further, there could be some downside. But based on what's the current pricing environment, it's consistent with what we projected.

Just back to that, what we said on the prepared remarks, that the pricing that is reflected in our guidance for Q2 does reflect some additional promotions compared to Q1.

So have the promotions in February, so far, have they gotten deeper than they were in December, January? Or is it pretty much consistent with how it had been tracking then?

Well, there are different types of promotions so it's seasonal, it's a little bit different because in the first quarter, we are promoting significantly bigger recounts where we actually were promoting more dollars going out our customers' doors. But I would say that overall, it's slightly -- pricing, in general, will be slightly lower in this quarter, and that's what we projected in our guidance.

And then just one other follow up. It looks like for the second quarter, you're expecting sales growth around 30% year-over-year. How should we think about that, Printwear versus Branded Apparel? And then any color you can give us on the year-over-year change in pricing versus change in units?

Well, we're not providing sales guidance for the second quarter by segment. But we're expecting strong sales growth in the Printwear segment due to our penetration in international markets, and some inventory destocking by distributors in the U.S. wholesale channel and also increased market share for retail.

Our next question comes from Anthony Zicha from Scotia Capital.

Could you give us some color on inventory levels at the wholesale distributor level?

Well, from the CREST report of December, I mean there's a bigger snapshot that our inventory is in the range of 45% relative to our share in the low 60s. So we've really destocked the channel. And the inventory levels, the way we see so far and the way that purchases in our POS is going -- has gone through in January, our inventory levels should be in similar position. And the one bright spot is, which we haven't finalized yet obviously, because our CREST is not out, is that so far in January, we're seeing somewhat stronger POS than we projected. And even in February, we're seeing even a stronger result. So, so far, our POS has actually picked up. It's a little early to tell, but it's picked up more so than we projected. And hopefully, it's time to come.

And the distributors, do you feel that they would start to restock sometime in April?

Well, I think that the distributors are going to carry inventory based on their going-forward sales. And if that's -- we have enough inventory to support the retailer needs, so -- I mean, the wholesaler needs, sorry. And so they'll bring inventories up to support their future sales based on the summer selling season.

And is there any difference between North America and Europe?

In terms of what, inventory?

Yes. Like, I'm just trying to relate to the other 30% increase on international's side so...

Well, the thing about international is that we never had inventory, I mean, period. So, I mean, for the last 3 years, we keep telling everybody, we haven't had inventory to support the market. So obviously, this year we have inventory, so that's a direct reflection against the opportunity that's in Europe, in Mexico, all of our international markets are doing exceptionally well and it's a function of us redeploying our capacity.

And then just one last question. With reference to the retail channel, can you give us an idea of the internal growth rate?

Well, one thing I'll add in response to the previous question, that obviously Q2 of last year didn't include Gold Toe, which adds also significant sales to the year-over-year growth.

And then Laurence, could you give us an idea of the internal growth rate in the retail channel during the fourth...

Well, I think the...

I think, look, I think what we projected this year is -- what we've guided to was $600 million in revenue. Our retail obviously, we have a major push on it. We have a lot of capacity to sell. We have a lot of irons in the fire. We're working hard on driving obviously all of our brands. Starting with Gildan, we've now been able to place up to over 15,000 stores and locations. We've picked up a lot of regional accounts. We're expanding within each one of the regional accounts. We started an advertising campaign this year with the kick off of our New Mexican Bowl, which has given us a lot of visibility and has created a lot of hype from retailers to pick up additional product and we're working with other retailers that are looking to carry the line. And so we have a lot of opportunity, I would say, as we go forward. And in Gold Toe, we're definitely continue to driving their brand strategies. We have test in different retailers with Gold Toe underwear products. We're expanding some of their categories within the existing retailers. We have a new brand that we've launched in the Gold Toe, which is called SoleUtion. It's a compression sock. So we're working hard right now. Obviously, as we bring on all this capacity at Rio Nance V, and we're pushing hard to develop new programs. We have been able to secure some new programs for fall. But they are still going to fall within our $600 million, I think, guidance number at this point. But we're still pushing potentially for some new promotional items for the holiday and back-to-school period.

Our next question comes from Ken Stumphauzer with Sterne Agee Capital Markets. Kenneth M. Stumphauzer - Sterne Agee & Leach Inc., Research Division: Just as far as the 2Q guidance goes, in particular, as far as the unit assumptions go, I know that you're not willing to talk with any specificity about it. But if you kind of assume that the contribution from Gold Toe is similar in 2Q, it would imply the units are going to be up somewhere the 20% range. Is that purely a function of restocking? And is that something that you've seen already? Or is there something else that we should be aware of?

Restockings are relatively small compared with the impact of expansion in the penetration of the international markets and further market share penetration within the screenprint channel. So again, end use volume growth is much more significant than the impact of restocking in Q2. Kenneth M. Stumphauzer - Sterne Agee & Leach Inc., Research Division: And then just finally on pricing for the duration of this year, promotions have ticked up a little bit already in 2Q. You guys have very high finished goods inventory. It seems like some of your competitors, right now, are pricing under you. Do you still -- I mean, do you have a high degree of confidence that there won't be another pricing relapse as we get into lower-cost cotton across the industry in the back half?

Well, there's no guarantee what can happen in pricing. But I would say this, is that, first of all, where the pricing is in the market today, we've anticipated the pricing, first of all. And if you look at some of the other competitors that have announced results recently, they've had to take write-downs of their inventory because they're selling the inventory under their cost. So in certain cases, I would say that there's definitely irrational pricing going on in the marketplace at even today's levels. So if the price does continue to deteriorate, it's because it's irrational, it's not something that, I think, is sustainable, first of all. And as well as the same competitors that are pushing pricing down potentially in this channel are raising as fast as they can to raise prices at retail because their running through all their high-cost cotton. So I think as an industry, everybody is in the same boat. We're going to be obviously, consuming our high-cost cotton by the end of -- the beginning of our third quarter. And we feel comfortable with our positioning. And we also feel comfortable we can command a premium for our product. So if you noticed over the last course of even last year, we commanded a significant premium over the market pricing because of the brand and the strength of our brand in the marketplace. So I'm not concerned necessarily about the actions of some of these competitors, but we're prepared. We've taken the stance and I think one of the things maybe as being a leader in our channel, by taking the bull by the horn and devaluing and bringing our price to market like we did in November, not only is that going to benefit Gildan, but based on what we see in our POS in the month of January, which has also picked up much more significantly in the month of February, we projected this quarter to be down 5% and we're significantly so far ahead of that and when the press comes out, we'll probably -- you'll be able to see that, but we track our POS on a daily basis. So we're very comfortable that we've positioned pricing in the market so that we can, as an industry, create more demand and get end users buying T-shirts again. And we factored the current pricing forecast that we knew that this is going to take place and we feel very comfortable with our pricing.

Our next question comes from Andrew Burns from D.A. Davidson. Andrew Burns - D.A. Davidson & Co., Research Division: I was hoping you could elaborate on the temporary closure of Rio Nance I at the end of second quarter. I think, last call, it was -- you explained on reducing capacity there temporarily. First, are this cost with a full temporary closure incorporated in the guidance? And what would be required for you to bring that back online and what does that do to your fixed cost structure if that would remain idle?

Okay. Well, the cost is obviously factored into our guidance because it's part of our plan. The reason why we're accelerating the closure of that plant is because the startup of our Rio Nance V plant is going ahead of schedule. It's definitely become the lowest -- it's a flagship plant, now it's going to be our lowest cost plant, it's ramping up much quicker than we anticipated, which would ultimately result in additional savings as we move into 2013. And we lever those cost reductions into next year. And as far as the capacity, which I guess is another question somebody would ask, is that with our existing ramp-up of Rio Nance V, with our DR facility and Rio Nance II, and as well as our facilities in Bangladesh, we have capacity to support between 70 million to 75 million dozen depending on mix. So we have a lot of capacity. We're now going to take Rio Nance I down and we're going to -- we're in the process of reevaluating what type of equipment we're going to put in that facility. And it will come online as soon as we need the additional capacity. The plant is almost fully depreciated basically because of the fact that it's been running, it's our oldest facility, and it needs work and it needs to be modernized. So when it does come on, it's going to have a lower cost than its existing cost structure and will allow us to have additional capacity in the future. Andrew Burns - D.A. Davidson & Co., Research Division: And with your ability to grow the international business now with capacity available, I was hoping you could remind us of how big of a piece of business you think that could be over the next several years and the pace at which you expect that growth to come to fruition?

Well, there's no industry stats on international markets. What we can tell you is that we can sell -- the one market that's probably I would say more understood in terms of understanding the landscape because we can only go by the competitors and what we think their volumes are for example, and that's how we get our industry stats. But we have a long way to go in all of these markets and we could definitely grow international business by over 15 million dozens, let's say, for example, over a period of time, which would be quite significant to fill up our capacity requirements. But the real thing for us is driving our retail strategy. I mean, that's really part of our growth initiative. And what our focus is right now is making sure that we drive our brands, the Gildan, Gold Toe, and position ourselves to take advantage of this new capacity to support new retail initiatives as we go forward into 2013.

Our next question comes from Mark Petrie from CIBC World Markets.

Could you just talk a little bit about the inventory levels at your distribution centers in North and South Carolina and if you're satisfied of those positions and how they are relative to this point last year?

Well, our inventory is much higher than it was this time last year because last year, we had one quarter's worth of back orders. But I can tell you where we'll end the year. We'll end the year in unit volume similar to -- just slightly higher than it was last year. And even last year, we ended with probably just right or maybe just under the amount of inventory that we needed. Because as we go into some of these geographical markets, we need inventory. And so the inventory is definitely higher this year. It's peaking from 2 aspects. It's peaking, one, from the price of cotton obviously; and two, from the unit perspective. And as we go through the height of summer selling season, we're going to definitely see the units come down and the price of our unit cost come down as well by the end of the year.

What I'd add is that when you compare our inventories at the end of Q1 with Q1 a year ago, you have to take account of the fact that about $100 million comes from the higher cost of cotton and inventory. And also, we didn't have Gold Toe a year ago, which accounts for about $60 million of inventory. So the units only represent the balance of the difference.

And I just want to confirm that the guidance for Q2 and for the balance of the year, what does that actually include in terms of retail pricing?

It assumes the increases we took in retail, which those price increases were based on the future price of cotton where you see it today. They weren't based on the high-end of cotton because we took very few increases in retail along the way. So we only took 2 small increases versus the over -- broader market that took significant price increases in the 30% to 40% range.

Our next question comes from Tal Woolley from RBC Capital Markets.

Just want to ask about the Branded Apparel profitability. When you talked in December, you had mentioned that it would be marginally profitable this year. You're already starting to show some profit in Q1. I'm just wondering if there's a seasonality aspect to that number that you might see some -- you see it up being profitable this quarter, but Q2, Q3 it might be at a loss and then rebounding in Q4. Does that sound about right or...

The things that caused the segment to be profitable are the things that we mentioned in the script, that we're starting to benefit from sock manufacturing efficiencies from consolidating our production in Honduras. We're benefiting from the retail price increases that were implemented. We're benefiting from the accretion from Gold Toe. So even though retail was equally impacted by the significant increase in the cost of cotton year-over-year, it's now in the black. And as we go forward, these things are going to continue to allow us to further improve the retail profitability. Cotton cost is going to come down and we're going to continue to generate further sock manufacturing efficiencies plus benefits from the integration of Gold Toe.

So if I'm understanding it correctly, you're saying that if the year performs to guidance, that segment should be profitable for the four quarters of the year?

Yes -- well, I won't talk about individual quarters, but I would say that the full year should show very -- of the profit.

And then I'm just -- you just mentioned in the, I guess, in the non-Gold Toe business some destocking through the quarter in the retail part of the business. Can you talk to how much of that, you believe, is a function of the market -- the overall retail category performance or has there been some competitive losses that you can measure there?

I'll tell you one thing for sure is that 2 things have somewhat happened. One is that there's a direct relationship between unit volume and pricing in retail. So as you raise your prices, there's elasticity of losing volume. I think those are almost a trade-off, one for one, in terms of. So POS is slightly down in our cases, in the products that we sell, in retail overall, because we definitely took some price increases and it's effecting the sell-through. But not that significantly because we didn't raise prices that much. But what's driven down the inventories, I think, is the seasonal products that are being at retailers where their boots, jackets and so forth, are not selling because of the weather. So they're looking to bring their inventories down where they can on more replenishment-type items. So if you look at our inventory reduction versus our POS reduction, it's far significantly higher on the inventory side than the POS side. So hopefully, as the big retailers just finished their year ends, they'll start to restock their shelves as we go into this quarter.

Our next question comes from Vishal Shreedhar from National Bank Financial.

I was hoping you could help me understand the capacity. I'm looking for the exit capacity at the end of the fiscal year and maybe your run rate capacity or your average capacity through the year?

Well, we're managing our capacity this year to manage our sales forecast. That's why we took time out. So what we're doing is we're running a higher level of unit volume and we've taken time out in -- 4 weeks at Christmastime, and we'll take it a little bit more in Easter, which is all factored into our forecast to manage our inventories. And then as we go through the balance of this year, we will have enough capacity between the 3 facilities, like I said before, between 70 million to 75 million dozens, depending on what our requirements are going to be as we move into 2013. And we'll have visibility of our 2013 probably as we get to the summer period of June, July as we focus on our opportunities at retail, as well as we see the improvement in demand in the wholesale market.

So if I understand that correct, at the end of fiscal 2012, you'll have activewear capacity of 70 million to 75 million?

Yes, activewear and underwear. Yes.

And then through the year, how much -- in fiscal '12, how much do you intend to produce?

Well, we're going to produce what our sales volume is and that's, I think, leave it at that.

And then fiscal '13, our prior assumption with Rio Nance I running, was that the exit capacity out of fiscal '13 would have been 94 million dozens. Now, with the Rio Nance I down, that's no longer a valid assumption, is that correct?

Well, it's not a valid assumption today because obviously, we're taking it down. But we can renovate Rio Nance I in as fast of a period as we chose to do it. But we started up Rio Nance V in September and it's going to be running at the same volume as Rio Nance -- it's going to be ahead of Rio Nance I's volume by April. So -- just to give you an idea, so we have the capability to expanding capacity quite quick. So that's not a really concern for us. That'll be a great problem to have to be honest with you.

So Rio Nance V will fully ramp up through the year and by the end of the year it's going to be fully going. And just to circle back, the 4 weeks of shutdown, how much capacity does that take out?

Well, it's a figure I'd rather not say right now, because it's too specific. But I would just say that if you take 70 or whatever number it is, and you divide it by your 50 weeks, that you can figure out when we will do run the capacity, that sort of the number on a weekly basis.

Our next question comes from Susan Anderson from Citigroup Investment Research.

I was wondering if you could talk about the unit growth in the retail business, like what percent is broken out by price and what percent by units? And then, if possible, if you could break out between Gold Toe and private label? And then lastly, just wondering if you're still planning on exiting part of the private label business?

I'll start with the strategy on our branding strategy. We've exited most of our, what we call, private label business, that are nonbranded-type products. The only items, which we have and are selling today are Gold Toe brands, Gildan brands, the Starter brand and the Danskin brand is the bulk of most of our sales today. And we're managing the non-owned Gildan brands because we are actually doing all the marketing and are not -- well, the other merchandising and development of those brands. So those are programs, which we're going to continue to focus on and hopefully expand.

So the $30 million to $40 million that you talked about last quarter is already out there.

Yes, exactly. We're in the same position.

And then have you broken out the dollar amount between Gold Toe and other part of the business and their margins?

No, they're increasingly integrated into one business, and we don't want to breakout the sales between the 2. But clearly, what we can say is that the sales growth in units was from the impact of the Gold Toe acquisition. And then on top of that, we had maybe about what we said before about $10 million impact of retail price increases in the quarter.

And then in terms of inventory, it looks like it was up 66%. Can you maybe break out what part was Gold Toe, what part higher cost and then what part units?

Yes, well I thought actually I gave that information in response to an earlier question, but I'll give it again. About $60 million was due to Gold Toe. About $100 million was due to the higher cost in inventory and the balance was units.

And then have you guys given the cost associated -- like how much it's going to cost to shut down Rio Nance I?

It's insignificant and it's in our forecast.

Our next question comes from Susan Sansbury from Miller Tabak. Susan R. Sansbury - Miller Tabak + Co., LLC, Research Division: Two questions related to Gold Toe, if I may. Laurence, can you actually be specific about what the level of accretion was in the quarter? And secondly, can you talk about some of the major changes going on in the mid-Tier, I'm referring to J.C. Penney? And how that, in your view, will affect Gold Toe on a go-forward basis?

The bridge we gave you in December for the increase in EPS from Q1 last year to Q1 this year included about $0.05 of accretion from Gold Toe and the performance was in line with our forecast.

And then the strategy with J.C. Penney, we think, is going to work very well for us. We're encouraged in terms of the direction where they're heading in terms of their pricing strategy. And actually, in one of their last -- I actually want to say, one of their -- we got referred to as one of the opportunities, let's say, for example, we're developing the account and pricing our products at J.C. Penney. So overall, I think, we're very happy with all of Gold Toe placement, and we're looking to expand not just into new sock categories like ladies, for example, where it's traditionally been a men's socks solutions brand and as well as our underwear programs, which we're trying to lever through the Gold Toe brand branded in distribution. Susan R. Sansbury - Miller Tabak + Co., LLC, Research Division: Any ramifications relative to what's going on at the other mid-Tier and/or discount retailers with respect to J.C. Penney's new pricing strategy?

Well, first of all, I think it's early to tell for sure, right? But we're very confident with our placement and we're projecting to have a continued growth with all these customers.

The next question comes from David Glick from Buckingham Research Group.

Just a couple of quick follow-ups. I was wondering -- thank you for the update on the textile capacity, I was wondering if you could update us on the sock capacity as well? And also, give us some color on what's happening with labor, wage inflation in the various manufacturing regions where you operate. Obviously, Honduras being the biggest?

Okay. Well, as far as far as the sock capacity, obviously, our capacity hasn't really changed in socks. The only thing is, is that mix changes our capacity. So when we're producing Gold Toe socks, for example, they take significantly longer to knit, let's say, for example, than we would our basic Dum Dum promotional sock, I mean, just to give an example. So mix has changed. But basically, we're ramping up both of our plants and objectively, by the end of this fiscal year, as we integrate Gold Toe products into our facilities, we'll be using the bulk of all of our capacity and we might have still a little bit of leftover but we'll be pretty well utilizing and reducing our cost of our 2 sock facilities based on the mix that's going in there.

That's about 65 million dozens, is that still the number or...

Yes, it all depends on mix, right?

So it's lower if you would Gold Toe...

It's lower, yes.

Okay, got it. And anything left in the U.S. or...

No, there's nothing about the U.S. And as far as the wage increases, the government has just announced a 3-year wage increase that's going to increase wages in Honduras and particularly like 7%, 8%, 8.5% roughly for the next 3 years. And again, which is also going to be followed most likely by devaluation. So you have to look at -- when you look at these countries from a wage inflation point of view, you also have to take currency devaluation. And also, at the same time, you have to look efficiencies and other things. So I would say that from a labor point of view for the next 3 years, I think we feel comparable that any type of labor increases will be offset either through devaluation or manufacturing efficiencies.

Our next question comes from Chris Li from the Bank of America Merrill Lynch.

I'm just wondering if the CapEx level of $100 million that you are guiding for this year, do you think it's sustainable over the longer term? Or is that a function of your sales volume?

Well, I mean, I think we're going to spend based on our needs. But accordingly, that's -- it's actually consistently over the last 3, 4 years, we spent more than $100 million. The moneys that we will spend, I think, on a go-forward basis, will probably be similar to that because we still have a lot of projects that we're looking to invest in like our power plant, revamping of our Rio Nance facility, distribution capacity we're putting in place. So we have a lot of other investment opportunities. So it's probably a good number as you go forward based on continue adding capacity, as well as cost saving initiatives.

And can you share with us how much you are investing in the SG&A expense for this year to grow your Branded Apparel business?

Well, we're investing in dollars spent on advertising probably about $5 million is the number between the Gold Toe and the Gildan brands.

Are there other expenses related?

Well, those are direct expenses. But obviously, I would say, anything in terms of promotion of the brand, that's book number. But the SG&A, in general, is much higher than it needs to be today because of the infrastructure we've put in place to support the growth of our retail business. So I think the big thing you have to look at is that as we discontinue to spend more on our ad side, as our business grows, we'll be able to reduce the operating side. So net-net, our SG&A probably over the next couple of years won't grow at all.

And just my last question is in Q3 of fiscal 2011, there was one quarter where the Branded Apparel was generally the positive operating income, which kind of stood out to me. Like is there -- what went wrong? What went on there, if you can give us some color on that?

I guess, we were not yet being impacted by the peak cost cotton in that quarter and it was the first quarter of the accretive impact of Gold Toe.

We do have a follow-up question from Tal Woolley from RBC Capital Markets.

I just wanted talk about the Rio Nance I decommissioning. Is it possible, like, if you -- how long does it take to wind down that plant? How long would it take to refurbish? And if you want to restart it up like as quickly as possible, what sort of time frame is that? How long a period of time is that? Is that a 6 to 9 months time frame that you could do that or is it 12 to 18 months?

Well, winding it down basically is happening pretty quickly. Because as we ramp up our 5 plant, obviously, we're going to wind it down, and we don't want to have a factory working at a lower volume because that will increase the cost. So the quicker we get it down, the better it is for us, and that's why we've been very successful in ramping up Rio Nance V. The infrastructure in the plant is there so it's not like building a new facility. So from the time that you order equipment, you get equipment installed in 6 months and then start training people. So it can go very fast. So with that, I don't think that's going to be an obstacle to react to any type of opportunities in the market whatsoever.

But I mean -- realistically, I mean, it seems like it could be like a year really before this is up and running again?

Yes. I wouldn't look at it. We don't -- honestly with the capacity we have now, with these other facilities, we don't need to bring this facility probably on before 2014. I mean, that would be probably the timetable. And we're comfortable with our capacity today with the existing facilities. But we're going to continue to finish this project. But 2014, we wouldn't need it for 2014 based on the capacity we have installed today.

And just my last question would just be then if you're reining in your net capacity expansions compared to where we were previously, you're mentioning that distribution inefficiencies in the branded business are sort of constraining the upside there, are we going to be in a situation where you potentially overinvested on the distribution side?

Maybe there's a misunderstanding, though, in terms of, even if you looked at what our trajectory was in our long-term projections, even though we're building Rio Nance V, we never committed ourselves to say, hey, we're going to go and sell dozens from Rio Nance V tomorrow morning based on all these dozens. I mean, objectively, Rio Nance V was to be built and then ramped up over subsequent years, a 2-, 3-year period. But what happened was that the cost of our Rio Nance facility, just in ramping it up and closing down Rio Nance I, I mean, it's a payback in itself just from the differential between cost between V and I. The cost per dozen that we're producing in V versus the actual cost, even when Rio Nance I was fully ramped up, is a significant savings. It paid back and make the economics of Rio Nance V payback in itself. So what happened was we just accelerated Rio Nance V, really, is truthfully what we've done after we've analyzed the opportunity and the cost structure of it. And then we're going to go back to Rio Nance I eventually and get it to be up to speed because Rio Nance I, if we don't stop it now, it would be -- come to a certain point in time that we'd never come back to the facility -- in that facility and getting it up to the same type of cost structure as what we need to have in place, similar to Rio Nance V.

Just to be clear, I just wanted to make sure that the -- that you still feel that beyond the manufacturing, at the distribution system and everything, that is still rightsized to your capacity expansion plans over time?

Totally. I mean, we still have work to do. So we don't underestimate the work intended to go in and grow our top line sales. But we're working very diligently now. We're going to expand our distribution. Everyone of our growth markets are going to gain more market share in our distributors. We're going to keep growing our international business. But most importantly, we're going to drive our retail strategy to continue driving and utilizing our capacity and driving our top line sales.

There are no further questions at this time. Please continue.

Thank you. Just before ending the conference call, I'd like to remind you that Gildan will be holding its Annual Shareholders' Meeting tomorrow at 10:00 a.m. Eastern in Montreal at Centre Mont-Royal. We'll, therefore, be available to take some questions this evening, and we can take some follow-up questions tomorrow afternoon. So thank you very much for joining us, and we look forward to talking to you at the next conference call. Good night.

Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect your line, and have a great day.