Welcome to the Fourth Quarter 2013 Earnings Conference Call. My name is Lorraine, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now like to turn the call over to Ms. Sophie Argiriou. Ms. Argiriou, you may begin.

Thank you, Lorraine. Good morning, everyone and thank you for joining us. Earlier this morning, we issued our press release announcing our fiscal 2013 earnings results for our fourth quarter and full year and the initiation of our fiscal 2014 guidance. Early next week, we will be filing our shareholder report containing management's discussion and analysis and our 2013 audited consolidated financial statements with the Canadian Securities Regulatory Authorities and the U.S. Securities and Exchange Commission. These documents will also be made available on our website at www.gildan.com. With me on the call, I'm joined by Glenn Chamandy, our President and Chief Executive Officer; and Laurence Sellyn, our Executive Vice President and Chief Financial & Administrative Officer. Our call today will begin with Laurence taking you through our fourth quarter performance and our business outlook. After which, a Q&A session will follow. Please note 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 Authorities that may affect the company's future results. I will now turn the call over to Laurence.

Good morning. This morning, we announced our results for the fourth quarter of fiscal 2013, which were at the high-end of our previous guidance. Adjusted EPS of $0.83 per share were a record for the fourth quarter of the fiscal year. Q4 was our fifth successive fiscal quarter of record earnings. Today, we also introduced our guidance for fiscal 2014, including our outlook for sales, EPS, capital expenditures and cash flow. We will review our Q4 and full year results for fiscal 2013 and then discuss our outlook for fiscal 2014, as well as some of the factors impacting our ongoing growth strategy and EPS growth objectives. Compared to a strong fourth quarter of fiscal 2012, EPS were up by 6.4% on net sales growth of 11.5%. Net earnings before income taxes increased by 12.2% compared to the fourth quarter of last year. The effective income tax rate was 3.1% compared to a tax recovery in the fourth quarter of last year. The higher income tax rate was due to the strong performance of Branded Apparel. Net sales for Printwear increased by 12.5% in the fourth quarter, and segment operating income increased by 11.2% compared to the fourth quarter of last year. Unit volume growth in the quarter was 18.7% due to a 37% increase in unit shipments to target international markets in particular, Europe and Asia Pacific, and continuing sales growth in the U.S., including the non-recurrence of de-stocking by U.S. wholesale distributors, which occurred in the fourth quarter of last year. We continue to be impacted by capacity constraints in the quarter. In particular, we were unable to fully satisfy seasonal distributor demand for fleece. Also, although shipments to Europe increased by over 30%, we were unable to fully capitalize in our strong momentum in the distributor channel…

Thank you, Laurence. [Operator Instructions] Lorraine, we are now ready to begin the Q&A session.

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

You are saying that you expect to finish securing the location for your new textile facility in the middle of 2014. Has it taken longer than you expected to secure a location?

Yes. Well, first of all, we're pretty close in our decision-making process and we're probably in the final stages of our due diligence in terms of our locations. So we're just not prepared at this time, to make an announcement to exactly where it is, but by our Q1 conference call it will definitely be in place and we'll begin our process of investment in the new site. So we're pretty far down the path at this point. Hope that answered your question.

We'll start up in line with our original expectations.

And why is construction not starting in 2014 but only in 2015?

No, construction will start in the later part of 2014 and the plant will be fully built during '15 and we will support our forecasted production requirements under that facility in 2016. So one of the big advantages of obviously staying in this hemisphere is the speed-to-market, I mean levering our management resources and the all of our talent in the Central America basically. So we're very comfortable that we're still on track in our positioning. The only thing is that for us, the sites we're looking at, we're just making sure that we have all our due diligence complete and we're very, very close to finalizing and we're pretty well on track to our original forecast

Okay, so construction in fiscal year '14 to start?

Yes, it will start in '14, yes.

And our next question comes from Taposh Bari from Goldman Sachs.

You made reference to this $100 million sort of cost savings by 2017. It's a pretty material improvement in your operating margin potentially. So what we'd like to know is how are you planning to flow that through to the bottom line? Is that a cost-savings that you ultimately plan to reinvest in other parts of the business or should we expect the majority of that to actually flow-through?

Well, historically you look at the strategy of the company is always to reinvest in terms of growing our top line. At the same time, there's still a lot of inflationary factors that are occurring in the marketplace. So, we don't -- we're not sure at this point but part of this could be used to drive topline, some of that is used to offset inflation, but it then -- and some to obviously increase our margins and our operating earnings but it's premature at this point. But I think, the most important part is that the company continues to invest heavily. We're widening the gap against all of our competitors in terms of the amount of capital we put into work in our capital expenditures and our low-cost manufacturing, which is, we think strategically located to service all of our functional markets and as we continue to make these investments, we'll reapply these investments into delivering lower costs, better quality features. So a lot of our investments like in the yarn-spinning is not just going to be in terms of cost, but it's also going to be in the quality and the types of yarns that we're going to be making to drive our top line growth. So I think the most important thing for us is that it strategically places us further ahead from our competition and will allow us to generate our top line sales and increase our earnings potential as we go forward.

And then you mentioned the inflationary cost pressures in the press release and also in your prepared remarks. Can you help, I mean, despite the fact that cotton seems to be structurally stable, could you talk about where those inflationary pressures lie, what the magnitude of that is and if that's changed from years past?

Well, pressure inflation is everywhere. I mean there's labor, there's transportation, dyes and chemicals, I mean you see it everywhere today but I think as far as we're concerned, we're not planning obviously -- we're planning for price decrease in our Printwear business and flat pricing in retail, so part of what's even happening and occurring this year is that we have continued manufacturing savings that are offsetting a lot of the inflationary items, which is historically what we've done. So, again we're positioned to continue growing the earnings of the company despite inflation but it's definitely a factor.

And our next question comes from Stephen MacLeod from BMO Capital Markets.

I'm just wondering with your 2014 Branded Apparel revenue forecast of 15%, is there any way you can break it down between how much is coming from new branded programs, increased shelf space and global lifestyle brands.

Sure. Well, maybe just take a step backwards, and what we said last year is that in 2013, we achieved new programs of about $100 million and we said that $50 million of those programs were going to occur in 2013 and then as we annualized them in '14, $50 million would flow into '14. The reality is that because of the success of the programs we've launched in '13, we achieved higher sales growth in '13, which is more like a $70 million in '13 and about $30 million split -- spinoff in '14. Also at the same time, we're going to be -- so you're starting off with a base. If you take the base case of '13 and you flow the annualized programs we won in '13 into '14, you got about $30 million of sales growth. And that's actually going to be -- at the same time we're going to be exiting approximately $30 million of private label sales particularly the underwear program -- Starter program at Wal-Mart and some other small programs. So we've lost about $30 million when negative and we've achieved over $100 million in season. So, we're planning to have about $100 million in new programs, they're going to flow through our cost of goods in 2014. So we'll have some flow over even into '15, and we'll also have about $15 million from the New Buffalo acquisition. So that's really -- so we've got a lot of new opportunities and new wins, and really where we see this going right now is that it's all over the place. It's not the 1 specific area. We've launched our Gildan Platinum, we replaced the socks in 2013, we've expanded into underwear, and we'll expand that into activewear in 2014. We're expanding our Gildan…

So is that a $100 million of incremental new retail program wins in 2014, is that right?

Yes.

And then on Mossy Oak, just as a segue, can you just give us a sense of what that could represent in terms of magnitude?

It's going to be big. I'd rather not say right now. I mean it's early stages for us but we've projected this to be a big part of our forecast as we go forward. We're very excited about it and the reception we've received from all of our retailers across the board and every channel distribution has been fantastic. So it's going to be good. I mean and I'd just rather -- at this point of time, it's early days and as we go forward, we'll give you a little more insight into that.

And our next question comes from Kenric Tyghe from Raymond James.

Laurence, you highlighted the capacity constraints in your prepared remarks. And I'm trying to reconcile that with the very, very conservative -- or what appears to be very conservative guidance on your Printwear segment for fiscal '14. If you have that sort of demand pull in the channel, you have to be making, I think some fairly aggressive assumptions on the level of promotional activity given what your guidance is in Printwear. Could you try and help us better understand the Printwear dynamics given that you have demand in excess of what you can satisfy and save you some sort of pent-up demand going into fiscal '14.

It's Glenn. Maybe just to go back to the lack of capacity in 2013. It was specifically in, I think 2 areas, one is in our fleece demand, because our fleece demand really outstripped what our initial thoughts were in terms of what we were going to sell. So we know sales would exceed our expectations tremendously. So we were chasing that all season. So that's where we really -- we left the fleece opportunity in 2013 and we're expanding rapidly our fleece production as we speak. We're actually building new sewing facilities to keep up because it's not necessarily a textile capacity restraint because our plants are really versatile. It's more of the ability to get all the operators in place to sell the product, which we're in the course of doing right now. And the second is that, in Europe we basically again exceeded our expectations there. We had a 37% increase in sales and we just didn't have the product at the right time to be able to service the demand in that market. So again, we'll bring a lot of new product and we're front-loading our distribution centers in Europe as we go forward into 2014 and we're going to drive that piece of business. As far as the pricing is concerned, we're planning to have obviously 5% unit growth in our U.S. market in 2014 with the 3% growth in sales so we're projecting that negative selling prices of around 2%. That 2% is reflected really in discounts, promotional discounts. So that is all not a 100%, all been committed to, so some. And that's also in reflection of what the future price of cotton will be as we go through the course of the year. So we may spend that, we may not spend it all, we may spend a portion of it but it will just -- all dictate in terms of how the market and what the market conditions are, et cetera. So, to be prudent, as we see the price of cotton coming down, we've reflected the additional discounting during the course of the next couple of quarters and that's sort of how we position at this point, to answer your question.

Just a follow-up on cotton, could you provide some color how far through fiscal '14 you are currently covered and that's only from 6 plus months, so thereabout. Is that fairly consistent or has there been a change in the strategy with respect to your forward cover?

We just don't want to commit to where we're covered. I think that we have pretty good visibility at this point. We feel comfortable with our guidance number and which cotton is reflected in our guidance and I would just leave it at that for now, if you don't mind.

And our next question comes from Mark Petrie from CIBC.

I was wondering if you could give a little more color on the SG&A guidance, sort of the bridge from fiscal '13 to '14 and the outlook on your advertising spend.

I'll do the advertising and Laurence can give you the bridge. As far as advertising for next year, we're increasing our advertising spend. Last year obviously, we did our Super Bowl commercial, which was a big spend for the company. We're going to be reallocating those dollars into more productive -- and it was a great event for us and it really paid dividends but we're going to spend that money in various ways to continue driving our brand as we go through the year and we're most likely going to spend another 20% over last year on advertising on a year-over-year basis. Do you want to bridge?

As we said in the prepared comments, we're not projecting any material decrease in overall SG&A dollars in 2014 and we've guided that it will come down as a percentage of sales from close to 13% this year to approximately 12%. And that will be because we are leveraging the big investment we've made in setting up Branded Apparel as a separate, stand-alone operating division and driving our branding strategy with additional volume growth.

Just in terms of the pace of the growth in the branded segment, you highlighted Q4 as a time when you thought with fleece particularly, notable growth in branded. Will it be fairly flat sort of throughout the first 3 quarters and then accelerate in Q4, is that how we should look at that?

We have a lot of our new programs. Usually when you get shelf space, I mean some of them are skewed into the back half of the year, similar to I think, '13. But the ones that occurred on a year-over-year basis, we're going to continue to obviously flow-through. So I would say that more of them will be back ended as obviously it's back-to-school holiday so forth and also new sets for new programs that we're going to be receiving and I guess, maybe just the way I look at it.

And our next question comes from Anthony Zicha from Scotiabank.

Glenn, could you give us some color in terms of the new hub facility 2013, like what kind of production levels we're looking at and could you also give us some color on how production would be geared to. Are you getting some retailers that are switching suppliers from Bangladesh going into Central America, will it be more dedicated to lifestyle brands as existing retailer demand or -- also, I'd like to know why not Honduras? Is it related to risk diversification?

Well first of all our capacity on our new facility will come on stream at the end of '15 really to support '16. So that's when the big ramp up will come, just to clarify that. Right now, we're in the position. We started Rio Nance I in August, end of August, September. That plant is being ramped up during the course of this year. Rio Nance I will support our requirement build for '14 and as we ramp it up and utilize that facility for fiscal '15, so really Rio I will support both the '14 and '15 as it ramps up during the course of this fiscal year. And then we'll utilize the capacity from this new facility in '16. Part of the obviously Central America for us is an area where we're making the investment like I said earlier. Partly[ph] the strategic rationale is the closest, most effective way to support all of our replenishment programs for all of our divisions and all of our customers. Secondly, we can lever all of our management and our resources and our talent to build it up quickly. We have a huge infrastructure in Central America. Central America is not that bigger place at the end of the day. It's a small country, it's linguistically the same everywhere you go. So it gives us the ability to really move people around to be able to set the facility up. And to answer your question in terms of the diversification, yes, we are looking to diversify as part of our strategy as a company. We're very comfortable with our assets we have in Honduras, but at the same time to be prudent, we're building another hub also that we'll build to expand. So we're not just building a site to put 1 textile factory, we're putting a site up to build multitude of textile factories so that we can support not just the growth for 2016 and '15 but beyond that. So if you look at where we're positioned today, we can continue growing at Honduras, we're building a new hub that's going to have growth opportunity and we still have growth opportunities beyond [indiscernible] the Dominican Republic so as part of our strategy, we think that this hemisphere is a place to produce for our customer needs and this will allow us to have a good, diversified portfolio of manufacturing and also continue to lower our cost structure and also be able to bring speed to market this capacity as it comes on.

And to answer the question with reference to retailers switching suppliers, are you seeing some flow of business and orders coming from Bangladesh back to Central America?

Look, definitely it's going to happen. I mean if you look at really, I would say that the profile as retailers look going forward, a lot of energy has been spent on compliance of labor, not a lot of effort has been based on compliance of other aspects of building structures, waste water treatment, et cetera. So I think as there's more scrutiny in terms of dealing in these countries, I mean it's a lot of reputational risk, let's say for example and I think that the answer to your question is people are going to continue to look to produce more goods in this hemisphere. Again, that's why we're positioned right. We're investing in manufacturing and this is really what our key core competency is, is having low-cost manufacturing, combining it with quality brands and providing value to all of our customers.

Last question related to the lifestyle brands like what do you see your potential at in terms of that niche going forward?

It's a big potential. I mean one of the things that we're doing right now is we're actually utilizing the Anvil facility. We're spending a lot of money on that plant right now to gear up, to produce the required materials to support them. So the big opportunity for those lifestyle brands is going to come in '15 as because the plant is being ramped up, we've got new technology and equipment coming in to support them and that will be installed during the course of this year. And as we've developed these products and improved products with these brands, that's really going to drive our sales in '15 and that will be a big opportunity for us and let's face it, everybody is looking to move product back to this hemisphere and I think we're positioned perfectly and we're very excited about the opportunity.

And our next question comes from Tal Woolley from RBC Capital.

Glenn, I'm just wondering if you can sort of give your sort of longer-term views on the price of cotton here. Obviously, it's started to trend back down again. I think in your prior comments you sort of said somewhere between $0.80 to $0.90 was sort of your long-term view, is that changing at all or...

No, I think that's still a good view. The one thing that people also have to realize is that it's not just the price of cotton but it's also the price of buying the physical, which is the basis, for example, that we need to pay the merchants to get the physical cotton to us. And if you combine those 2, even though we've seen a little bit of a decrease in the price of cotton, some of those other costs have gone up at the same time. So, but I would say that if we took a long-term average, I mean I think $0.85 is probably a pretty good place to be.

Okay, and just on the acquisition front, you obviously -- it seems like something you're keen on moving forward with next year. Are you favoring, trying to find new brands and licenses, is it international platforms, looking for other opportunities to produce capacity utilization. Can you give some thoughts to that?

Look, our strategy is obviously to continue to grow and to complement our organic growth. So it could be 1 or all 3 that you mentioned basically. We're looking to continue driving brands and investing in brands that will drive our top line sales. We're looking to maybe go into new product categories that we're currently not servicing today, and we're driving our international platform. All these are areas of growth for Gildan and if we can acquire a company that can help support or expedite that opportunity and that's what we're looking to do and from my perspective is that even though we're investing, obviously significantly in CapEx with the $300 million to $350 million capital expenditure, we still have sufficient cash flow as we go forward to look at investing in some of these opportunities and it's a great place to be. And I'm not saying -- and 1 thing for sure is that -- and we have tons of runway even on our organic strategy as well. So I mean it's really -- I think we're really well-positioned. And at the end of the day this will always continue to lever our SG&A and continue driving the growth of the company in earnings and EPS.

And our next question comes from Chase Bethel from Desjardins.

My first question is -- it's on yarn-spinning. Could you provide a bit more color on post the investments that you're making, where you think you'll be in terms of meeting your internal yarn needs? And then Laurence, can you maybe elaborate on what the partial year impact of the yarn-spinning is in '14, like cost savings?

Okay, so, do you want to take the first?

Yes. I won't breakdown the composition of the impacts of manufacturing efficiencies that we're projecting in 2014 but the total EPS impact of manufacturing efficiencies from our capital investments that's reflected in our guidance for the year is about $0.25 per share and then that is partially offset by cost inflation, which negatively impacts EPS by about $0.10 for a net of $0.15.

And the big savings from our investments in 2013 on yarn are really going to flow through in '15. So a lot of the investments and cost reductions are due to other manufacturing efficiencies like biomass and et cetera, things that we've invested in because we're not just investing in yarn, obviously we're investing in a whole portfolio of investment strategies to lower our costs, which is our CPU, our biomass, et cetera. So we'll continue to invest heavily in all aspects of the business and if you take the CapEx of this year, only 50% of it obviously is going to be utilized for the yarn-spinning and the balance would be used to ramp up Rio Nance I, which is going to be coming on stream at a much lower cost, our new textile facility, we're looking to do some initiatives in the Dominican Republic to lower cost there, our energy-saving plants still to continue reducing our energy cost. Our new distribution center in Honduras, which will reduce cost for us. So there's various areas where we're continuing to spend, and the yarn-spinning just happens to be strategic initiative for us and that initiative is not only going to lower our costs but at the same, it's going to allow us to have I think different quality type of products that will allow us to grow to top line. So it's really a win-win in terms of where it's going to benefit the company. As far as your question in terms of our capacity utilization, one thing about the company as we're growing our capacity, we're bringing on Rio Nance I. We're starting with read our new hub. So as we continue to grow, even our textile capacity, obviously we'll bring on these yarn plants. So a lot of this is going to support our incremental growth and bring on new types of yarns like ring-spun, where we think to see[ph]that as a big opportunity for us to continue levering ourselves in all the channels of distribution.

And then on the CapEx, I was wondering if you could provide a bit more information on what the total second leg of yarn-spinning investment was. I believe some of the media reports suggested around $250 million and then how much of the CapEx on the new textile facility will actually be spent in '14?

Well, the yarn spend this year basically, is a small flow up from the existing plants we announced in '13 prior to the big announcement and then there's going to be a spinoff in '15 will be continued investment as we finalize the plants because obviously, when the plant gets built and it gets ramped up and equipment flows in so there will be continued investment on the original investment thesis that we went out, which is in excess of $200 million that will flow into '15 and for this year in the new CapEx for the...

We're talking about $150 million in 2014 for the yarn-spinning.

Yes, I know, I said that.

So the new textile facility, the new let's call it [indiscernible] type, how much of that is in '14?

The new yarn-spinning this year is about $150 million and that's basically going to be also from our original investments, some of that will flow into '15 and as far as the textile facility is concerned, it's going to be both $15 million to $20 million.

And our next question comes from Meagan Anen [ph] from TD Securities.

As you expand your global athletic and lifestyle business, which we presume as higher margin given the value add put into those products, could you give some color what the impact will be on the overall margin going forward?

We don't really want to initially separate our margins and I think one way to look at it is that, it's not necessarily going to be an incremental margin but it's going to be basically a margin on a much higher selling price. So you get the same incremental margin but obviously, the margin contribution is going to be much greater because of the added value on the higher selling price, maybe that's just a different way of looking at it.

And our next question comes from Vishal Shreedhar from National Bank.

I was hoping if you could give me a little more context on the private label productions in fiscal '14. I think, Glenn, I might have misheard you but you mentioned Starter. My prior understanding was these Walmart private label brands were something that you were still interested in.

Yes, but Starter discontinued the underwear brand in 2014 forward. So on a go-forward basis, we won't have that program but at the same time, our overall business is very strong in underwear. We're going to be going for a pretty significant increases and which is driven through obviously our Gildan brand strategy, as well as we're very excited about the introduction of our Mossy brand. So even though we're backwards a little bit on the starter private label business, the fact is, is that net-net, we have a significant increase in our large chunk of $100 million will be underwear sales as we go forward into '14.

Is that your private label reductions, is that all the Starter program, the majority of it?

In underwear, yes, but we still have private label socks, which is still a significant portion of our overall volume today.

And in terms of these line extensions that you're noting in Printwear in terms of more of a fashion-type apparel, more technical apparel and Mossy Oak as well. It seems like these products are becoming more technical to manufacturer, I mean there's more product features. Does that impact the efficiency of your operations and particularly with regards to your strategy of basic low-cost low fashion apparel. How do you think about these more technical type of apparel products?

Everything that we do is pretty well mass-market. I mean in the sense of even though -- with the strategy with Gildan, how we invest in technology so, for example, maybe take performance as an item and what we've been able to do with the development of our Gildan performance as sold in our print business and as well we're going to get placement in some of our retail space. The fact is, that we took an item and we developed a new technology in how to mass produce these products and bring them to market. So the fact is, that we're the only company that is actually making what we call a spun yarn because most of the yarn that's being made in performance today is really filament. And that yarn is knit on the same machine that we make basic T-shirt or basic underwear and then what we did is during our process we designed some unique things that are really exclusive to us in terms of how we're going to finish those products so that we can make them as a commodity-type product. If you look at where we're pricing in the Printwear division, our performance shirts, I mean it's $3 basically relative to when you see $40 performance shirts being sold in most of the retail channels. So our strategy is combining what we think is low-cost manufacturing, but it's not just the low-cost manufacturing, it's the technology that we use, to bring to market with better product features and then allowing a better proposition for the end-user and that's really what has driven our market share. So -- and that's what's driving our share growth this year and in our Printwear markets in the United States, a lot of the growth is going to come out of performance, our anvil ring-spun, so we're really driving basically our volume and we're not giving up any of our low-cost manufacturing because we're going to be committing to $100 million worth of cost reductions over the next 3 years. So that's part of our DNA, it's lowering costs, but not just by making better quality products that will continue to drive the top line of the company, I think that's the key.

And our next question comes from Chris Li from Bank of America.

This might be a bit too early to ask but I just wanted to get your thoughts on CapEx for 2015. Is it reasonable to assume the level will be similar to what you're spending this year?

I think it's too early to ask but I would say that we're going to have a spillover obviously from our big yarn investment. So we'll be going off of a pretty significant pace so -- but it's a little bit early to ask right now.

And in terms of the corresponding depreciation expense for this year, I think there was $95 million in fiscal '13. How should we sort of think about the ramp-up in D&A expenses for '14?

It's not really significant. It's not a significant factor. The depreciation is going to start to kick in after '14 and the depreciation that goes with $100 million of cost savings is about $40 million. I think that's really what you are trying to get at, $40 million of additional depreciation, yes.

Take your $90 million base and $95 million base call it a $100 million for this year and then another $40 million as it flows in over the next couple of years.

And my last question is, Glenn, as you continue to gain shelf space at the retail channels, what have you been seeing, how have your key competitors been reacting to your taking share?

I really don't want to respond about my competitors, you can ask them. But I think from our perspective, is that we positioned ourselves for the long run. We have the best value proposition offered at retail in every single channel distribution where we sell our products from the mass to the department stores. We're continuing to invest heavily, in our low-cost manufacturing and our quality of value relationship that we offer in terms of our products so we don't just have the best pricing, we also have the best products. So if you go to every single channel distribution, you will look where Gildan is positioned and where its competitors are positioned, we'll have the best pricing but we'll also have the best quality product because at the end of the day, that's going to win the war. So -- and then to top that off, we're going to continue to invest heavily on our brand strategy. One point of reference I think is that with our Gildan brand, with Gildan as a brand in fiscal 2014, we're going to sell close to 1 billion units, I mean that's just an amazing number and we're putting on the market between our activewear, our underwear and our pairs of socks, which is under the Gildan brand. So 1 billion units of Gildan label will be out in the market this year and that's a compounding thing. So as we support the brand, our advertising, and our value proposition, we think that there's lots of runway and we're very excited about the future.

And our next question comes from Scott Rattee from Stonecap Securities.

Just getting back to the CapEx. I guess it really just sort of sound like strategically, you've moved from sort of establishing yourself more in Bangladesh to sort of looking to establish the hub in -- second hub in the Caribbean Basin. You hadn't mention in the CapEx if there's any, allocated to Bangladesh this year and should we expect any of that -- any CapEx allocation into the Bangladesh area over the next couple of years.

Just to go back the Bangladesh, we went to Bangladesh not to support our North America markets but to support our international markets. So what Bangladesh is doing for us right now, it's really the engine that supporting our Asian markets where we're growing. Asia's a huge opportunity for us. We've seen huge growth in China this year. We finally had I think a pretty big breakthrough. We've been talking about it for a long time but that market is actually performing very well. For people's reference, I mean we don't talk about it too much but when we're in China, Japan, Australia, New Zealand, Taiwan, Malaysia, Thailand, Indonesia, we have distribution in every one of those markets. Asia's actually going to be our third largest market for us in fiscal -- by the end of fiscal 2014. So as we continue to expand our international growth, we'll look at future investments maybe but right now, we have enough capacity in Bangladesh to support the required sales for '14 and I would say even '15 but beyond that, we'll relook at it.

Okay, so then -- sorry, just a backup and just a point of clarification on the -- I think you noted that your 7%[ph] unit growth into the international market, I think a lot of that had to do with Europe. Europe comes from the Caribbean Basin as opposed to Bangladesh for the Asia Pacific group, is that how we should think about where the actual product is coming from to supply each of those different markets?

From Bangladesh, we can support Europe if we chose to do it but the bulk of our European production still comes from Central America. Some of it does come from Bangladesh but of that 37% increase, actually a large chunk of that increase was still coming from Asia. So a small portion was coming from Latin America and I would say the balance was probably half and half between Europe and Asia. So Asia's really grown this year significantly and we're on a pretty good clip there right now and it's a huge market. So we're supporting all of our international markets. Latin America's going to grow significantly for us next year and we're in so many markets that we haven't even have got to yet, there is a -- that we have on our list continue growing and we're still in early stages of all these markets. So our model is good. We're actually even in Europe, as part of our structure this year, we set the retail division in Europe as well. We have our Gildan brand being placed in retail stores in Europe, which is in a small scale but we have all the added value services, we have our distribution. All the things are in place to continue driving our brand. So as we expand globally, we're very comfortable and optimistic about the future and a lot of our capacity expansion in Central America will support Europe but Asia still has a runway to use the Bangladesh facilities.

And just 1 final one on -- you mentioned that some of the cost initiatives, there's the biomass but then there's also an electricity plant. I presume, or is it fair to presume that those cost initiatives will also be the type of CapEx projects that will also sort of breathe into 2015?

Yes.

We have no further questions at this time. I will now turn the call to Sophie for closing remarks.

Thank you, Lorraine. We'd like to thank you again for joining us this morning. Before ending the call, we'd like to remind you that in just in over a week, on December 2 up to the 4th, we'll be hosting our investor trip. So the Gildan management team is looking forward to welcoming you in Honduras where we'll have the opportunity to show investors and analysts our extensive manufacturing infrastructure and to discuss our business strategies and opportunities with you. So we look forward to seeing you there. And once again, I thank you for joining us and have a great day.

Thank you. And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.