T.C. Robillard - Vice President, Investor Relations Rich Noll - Chief Executive Officer Gerald Evans - Chief Operating Officer Rick Moss - Chief Financial Officer.

Eric Tracy - Janney Capital Markets Susan Anderson - FBR Omar Saad - Evercore ISI Michael Binetti - UBS Jay Sole - Morgan Stanely Ike Boruchow - Sterne Agee Jim Duffy - Stifel Bob Drbul - Nomura Carla Casella - JPMorgan Matt McClintock - Barclays.

Good day, ladies and gentlemen, and welcome to the HanesBrands First Quarter 2015 Financial Results Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the conference over to T.C. Robillard, Vice President, 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 first quarter of 2015. Hopefully, everyone has had a chance to review the news release we issued earlier today.

The news release and the audio replay of the webcast of this call can be found in the Investors section of our hanes.com website. I want to remind everyone that we may make forward-looking statements on the call today, 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 are detailed in our various filings with the SEC, such as our most recent Forms 10-K and 10-Q, and may be found on our website as well as in our news releases and other communications. 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, as well as our 2015 guidance, exclude all one-time charges and expenses.

Additional information, including a reconciliation of these and other non-GAAP performance measures to GAAP, can be found in today's press release, which is available on the Investors section of our hanes.com website.

With me on the call today are Rich Noll, our Chief Executive Officer; Gerald Evans, our Chief Operating Officer; and Rick Moss, our Chief Financial Officer.

For today's call, Rich will highlight a few big-picture themes, Gerald will provide a sense of what is happening in our businesses and Rick will emphasize some of the financial aspects of our results. I will now turn the call over to Rich..

Thank you, T.C. Our business model continues to deliver significant returns for our shareholders as contributions from our acquisition strategy and margin improvements in our base business drove 16% growth in earnings per share in the first quarter and that was on top of last year’s 50% increase.

Our acquisition strategy is working extremely well and this is a great quarter to see how all facets of this strategy are delivering significant growth. For example, Gear For Sports, which has been a part of our core operations for several years contributed double-digit revenue and operating profit growth in the quarter.

Maidenform, which was fully integrated only last year delivered additional synergies and contributed nicely to the first quarter’s profit growth.

As we continue to internalize their production and launch our ComfortFlex Fit [indiscernible] platform under the Maidenform brand later this year, we are on track to more than double their operating profit to $80 million by the end of 2016. DBApparel in just its second full quarter as part of Hanes brands was also a strong contributor to results.

We started the Works Council process last week and we expect to begin implementing many of the integration actions in the fourth quarter. This should lead to substantial synergy benefits in 2016 and continuing into 2017 and beyond, ultimately allowing us to reach our goal of EUR100 million of operating profit.

And only seven months after we added DBA, we closed our latest acquisition Knights Apparel. This is a great acquisition, making us the leading supplier of licensed collegian apparel in both the mass and college bookstore channels.

As we leverage the scale of our supply chain, the graphic art capabilities of our Gear For Sports business and our expertise in the mass channel we believe we can double their operating profit to more than $40 million within the next two to three years.

Integration planning has already begun and we believe a large portion of the integration actions can be completed by the end of this year with synergies beginning to flow through our P&L in 2016.

Now that we have several acquisitions under our belt, Investors are able to see how our acquisition strategy can deliver multi-year returns to our shareholders. And with just these expected synergy contributions, we believe we have great earnings momentum.

So in summary, we are off to a great start in 2015 with our first quarter results coming right in line with our overall plan. We feel good about the trends in our business and we have great visibility for the remainder of the year.

This along with the addition of Knights Apparel gives us confidence this early in the year to increase our earnings guidance which now assumes mid to high teens growth.

Looking forward, we believe the ongoing margin drivers in our base business, combined with the current energy roadmap for DBA and Knights Apparel, position us for continued double-digit earnings growth for the next several years. And with that, I will turn the call over to Gerald..

Thanks, Rich. We were able to deliver another quarter of strong earnings growth by focusing on the things we can control and executing our long-term strategy. Our acquisitions are paying dividends, we are gaining share in our key categories.

Our innovation platforms are driving additional space gains and our operating margin continued to expand, up another 90 basis points over the last year, excluding DBA.

Looking at the quarter, our innovation platforms continued to perform well, helping drive sales growth in men’s underwear and bras while overall innerwear sales decreased over last year. The decrease was due to a short-term retail inventory reduction in basics by a major account which dropped their retail inventory to its lowest level in five years.

This short-term reduction has already begun to reverse in the first two weeks of April and the good thing about replenishment categories is that these types of inventory imbalances don’t have a lasting impact on the business.

Bra revenue increased for the first time in several quarters as we began to anniversary the impact from our brand consolidation efforts and retail inventory normalized, particularly in the mid-tier channel.

For the quarter, innerwear’s operating margins increased 310 basis points driven by Maidenform synergies, benefits from Innovate-to-Elevate and efficiency gains from our supply chain.

Turning to Activewear, sales in the quarter increased slightly over last year as double-digit growth in Gear For Sports and increases in Hanes Activewear were somewhat offset by Champion. In the sporting goods mid-tier and department store channels, Champion has a significant amount of space gain this year.

With many new programs shipping in the second quarter, we believe champion is positioned for strong full-year growth. We were also encouraged by Champion’s sell-through trends in the mass channel which showed improvement in the quarter.

Switching to international, on a constant-currency basis, we saw strong double-digit sales and operating profit growth in Japan and Latin America while results in our ongoing Canada operations improved sequentially through the quarter.

With respect to DBApparel, they performed well in the quarter contributing approximately $184 million in sales and better-than-expected profits driven by favorable supply chain variances and strong expense controls. Sales in the key geographies of Spain, Italy, France, Germany and the United Kingdom were in line with plan.

And in France, sales growth was driven by the successful extension of the Dean [ph] megabrand beyond hosiery, underwear and intimates into socks. Now let me take a step back and provide you with a broader sense of our business. The overall consumer environment remains choppy with good weeks followed by bad weeks.

That said, the overall trends within our business remain strong. Sell-through, especially with our Innerwear Basics business continued to outpace shipments and help drive market share gains in the quarter. Our innovation platforms are performing well.

In fact, we are positioned to more than double our space this year and we continue to drive efficiency gains in our supply chain. Looking forward, we have great visibility into the remainder of the year as our space is set, our pricing is in place, the transaction impact from exchange rates is hedged and we have locked-in most of our key input cost.

So to sum up, the trends in our business remain strong. We have great visibility into the remainder of the year and our acquisition strategy is delivering substantial benefit giving us confidence in our ability to delivered double-digit earnings growth for the next several years. I will now turn the call over to Rich..

Thanks, Gerald. We had another quarter of strong operating and financial results. Contributions from our acquisitions strategy along with continued margin improvements in our base business drove a 16% increase in earnings per share, once again highlighting the power of our business model to deliver strong returns for our shareholders.

Now let me give you some color on our record first quarter results. Sales in the quarter increased 15% in constant currency with DBA contributing approximately 17 points of growth. Our acquisition strategy continues to be a major contributor to operating profit.

Double-digit growth in Gear For Sports, synergies from Maidenform as well as the addition of DBApparel had helped drive a 16% increase in our operating profit for the quarter.

Looking at margins, our gross profit margin improved 300 basis points to 38.1%, with DBA contributing approximately 190 basis points of the increase, while the remainder was driven by efficiency gains in our supply chain and benefits from our Innovate-to-Elevate.

SG&A costs in the quarter increased 280 basis points to 27.1%, with DBA accounting for roughly 270 basis points of the increase. This resulted in a 20 basis point increase in our operating profit margin as the 90 basis point improvement in our base business; more than offset the expected 70 basis points of dilution from the addition of DBA.

Interest and other expense of $27 million was roughly $5 million above last year, due to higher debt levels from our acquisition of DBA, while the tax rate of 16% was the same compared to last year. This resulted in earnings per share of $0.22, a 16% increase over last year.

Turning to guidance, with our Knights Apparel acquisition being completed so quickly, we're now able to increase our 2015 outlook.

We’re increasing our full-year sales guidance to a range of $5.90 billion to $5.95 billion, which includes the addition of approximately $160 million from Knights Apparel offset by a reduction of roughly $35 million from additional pressure in various exchange rates.

We're increasing our operating profit guidance to a range of $853 million to $873 million, with the entire $18 million increase due to the addition of Knights Apparel.

Remember, there is no impact to our operating profit guidance from our lower exchange rate assumptions as the FX transaction costs are mainly hedged and the FX translation impact is minimal.

Interest and other related expense is now expected to be a range of $95 million to a $100 million, an increase of $5 million, due to the additional debt associated with the Knights acquisition. Our full-year tax rate is expected to be approximately 13%. And similar to last year, we expect the tax rate to be higher in the first half of the year.

We believe the split between the first and second half of 2014 continues to be a good proxy for 2015. We're increasing our EPS guidance by $0.03 to a range of $1.61 to $1.66, which represents strong mid-to-high teens growth for 2015. We expect cash flow from operations to be $550 million to $600 million.

Capital expenditures are expected to be approximately $80 million to $85 million. Looking long term, we expect our CapEx should average around 1.75% of sales, which will allow our global supply chain to remain competitive, while also handling the increased capacity needs from our acquisition strategy.

And over time, as we spend at this level, our CapEx should roughly equal our depreciation. With respect to DD&A, our estimates of approximately 630 million euros in sales and approximately 30 million euros in operating profit are unchanged. This implies about 130 basis points of margin dilution from DBA for the year.

We expect DBA to continue to have a significant impact on our reported gross margin and SG&A rate until we anniversary the acquisition in September. So, in closing, we're off to a great start in 2015 and with our visibility for the remainder of the year, we believe we’re well positioned to deliver mid-to-high teens EPS growth.

Looking to 2016 and beyond, we believe our business model is designed to deliver continued strong shareholder returns as the combination of the benefits from current acquisitions, the momentum in our overall business and the returns from deploying future cash flows should drive solid double-digit EPS growth for many years to come.

And with that, I'll turn the call back over to T.C..

Thanks Ric. That concludes the recap of our performance for the first quarter. We will now begin taking your questions and will continue as time allows, since there maybe a number of you who would like to ask a question, I'll ask that you limit yourself to one question and a single follow-up and then re-enter the queue to ask any additional questions.

I'll now turn the call back over to the operator to begin the question and answer session.

Operator?.

Thank you. [Operator Instructions] Our first question comes from the line of Eric Tracy from Janney Capital Markets..

Good afternoon everyone..

Hi, Eric..

I guess, Rich, for you if I could start and maybe Gerald as well, just as it relates to the inventory reduction from a major partner here in the quarter, just two weeks of supply, lowest total in five years, just kind of talk through you know the rationale of them doing that, it sounds like it's reversing in April but speak to that specifically and then, what you're seeing beyond that within the core business?.

So, let me take that Eric.

When we look at the underwear business, what we see is our overall fundamentals for the underwear business are very sound, our share positions grew in the quarter, our POS is stronger than shipments, space is sound and actually we're expanding space behind a number of innovations as we look forward to the balance of the year.

So strong fundamentals, we do see fluctuations from time to time in our order patterns and in the quarter, we saw it in one of major retailers, and in fact those inventories did fall by almost two weeks of supply, which is really the lowest level we've seen in five years.

What I can say is, the great thing about our category is, ultimately over time, orders and replenishment, ultimately recover to the level of POS trends, and what we've already seen, as we enter this April period, is in fact those orders are recovering and flowing nicely.

So, I don't see any fundamental shift there, it's really just an abrasion of fluctuation in the order pattern..

Okay. And then if I could switch gears a little bit, that you know something that's emerging here is kind of a key topic is this Trans-Pacific Partnership legislation that just got agreed to be fast tracked last week.

Obviously, you guys have some decent cotton exposure in Vietnam, one of the TPP participant, so Richard, I would love to get your thoughts on just speaking of the potential likelihood of something getting reached here and then, how we should think about that playing out, in fact, it does get resolved..

Yeah, and so let me talk about it from two dimensions, one is sort of our overall strategic perspective and then I'll give you a little bit of color around what we think maybe going on in Washington.

At the end of the day, one of the reasons that we wanted to make sure our supply chain was balanced across hemispheres and we diversified both across countries was to be able to make sure we could take advantage of things that might emerge for example of the Trans-Pacific Partnership, when in fact if it is actually approved and passed by all the countries involved.

It will give us a substantial advantage vis-a-vis those people that didn't pursue that strategy, because we've been operating in places like Vietnam for close to eight years and by the time, something like this would come to fruition; we'd have a good decade or more advantaged on other people then deciding to go into those countries.

So I think part of our strategy of balancing that supply chain globally and making sure we could take advantage of things like this. Now that said, I do think that things in Washington and different governments around the world move slowly.

As you said, the Congress is moving forward the fast track legislation which would be the -- what's called TPA, which gives the President the ability to go and negotiate the deal with the other countries and then bring it back for a up or down vote to Congress.

So that's the first part of the process, if that does get passed sometime between now and Memorial Day, then the administration can go off and complete the negotiations with the 12 countries involved to try and put together the TPP or Trans-Pacific Partnership. Once that's actually finalized that would then go to Congress for a vote.

There is people who are optimistic that things of that could happen as early as December of 2015, there is people who think that it could take until later 2016 to actually get passed. It's Washington, things move slowly; we'll just keep an eye on it and see how it unfolds.

Once it's passed, once all the countries actually would approve it, it would then be a phase-in approach over time, but as I said, we wanted to make sure we're positioned globally to take advantage of these things, and we'll have a good leapfrog on everybody else because we've been operating in those countries such as Vietnam for such a long period of time.

It's a great country, it's doing very well for us, even without TPP, low cost, high-quality, we've got about 9,000 employees there and its expanding to about 12,000 over time, it’s a great base for us to supply places like Europe and we feel really good about it, rolling our supply chain..

Thank you. Our next question comes from the line of Susan Anderson from FBR..

Good evening, everyone. Thanks for taking my question. I guess on the activewear, it’s one if you can maybe give a little bit more color on the weakness there.

I know you talked about the new space gains don’t really hit on next quarter, but -- and then you said that the mass channel is improving, but I guess what’s the kind of like weighing that down given the better performance in Gear and stuff? Thanks..

Sure. Activewear did grow in the quarter as you noted, driven by Gear for Sports and Hanes and we expect it to continue to accelerate its growth overall for the full year and driving that growth will be acceleration of the Champion business to a mid-single digit rate overall for the full year.

Underneath that will be strong double-digit growth within the Champion business in department, specialty and mid-tier department stores and really what we have here is, we’ve gained a lot of space this year just as we did last year.

Those space gains happened to be more skewed to the second quarter, whereas they were very strongly in the first quarter last year. In fact last year, our sales were up in the Champion and department stores sports specialty business about 62%, driven by a lot of placements in the first quarter.

Lot of these are skewing as we get more space into the second quarter. Next year, I think you’ll see in that Champion, department and sports specialties store business double-digit growth in the second quarter and you’ll see that continue throughout the year..

Okay, that’s helpful.

And then on Maidenform and the improved profitability in the innerwear I guess, what percent is the 310 bps was due to Maidenform and then also, did you guys have a full quarter of that kind of flowing through the P&L or should we expect kind of like the profitability to continue to improve throughout the year?.

Well, I don’t want to break out into too much details for the profitability of a particular segment, but that said, it was a major contributor into the profitability in the quarter along with Innovate-to-Elevate and manufacturing cost savings. The synergies from Maidenform are flowing in at or little ahead of where we thought they would be.

So, we’ve been very pleased with how the integration plans have driven the synergy gains in Maidenform..

Thank you. Our next question comes from the line of Omar Saad from Evercore ISI..

Thank you very much. Good afternoon, guys.

I guess my first question is, organic growth, kind of peel back the acquisitions, what was it in the quarter, how does that compare to where it was kind of been trending the underlying growth, the revenue growth trends and what’s embedded for your full year guidance? And then I have a follow-up question as well..

For the first quarter, the organic growth was 1% -- 2% on a constant currency basis as we had about $13 million of FX drag in the first quarter.

That was -- as we said in our prepared remarks, the first quarter came in overall right about where we thought it would be and so, you’re going to see those same sorts of trends through the year as we put in our original guidance..

And then I think on the second part of your questions, what’s embedded for the full year for organic growth in constant currency and it’s 2% for the full year. So, I don’t want anybody to over read sort of the ups and downs and fluctuations in the first quarter.

We don’t see any trend change in our business whatsoever when you’re looking at sell-through. We’ve always talked about things are up and down as retailers move inventory, that’s all it is and I don’t want to overplay it. We feel good about the overall trends in our business..

And then on the -- thanks, guys, it’s really helpful, Rich and Rick.

And then on the innerwear margins, I mean, is that -- all that gains coming from synergies in Maidenform or is there other things going on the business that we should have our arms around?.

I think yes and yes, right. So, this was a good quarter for Maidenform synergies, because remember, last year in that first quarter, we still had some of the SG&A, so, we’re overlapping some of that, but it’s also just Innovate-to-Elevate manufacturing synergies and how we’re able to drive the overall business.

So -- but that was an anomaly if you remember Maidenform. We still had some of those SG&A costs that we’re now sort of overlapping..

Thank you. And our next question comes from the line of Michael Binetti from UBS..

Hey guys, good afternoon, how are you doing? Maybe a couple of questions on Maidenform here.

The -- I think that’s just a process, because this is one of the bigger acquisitions you have as you had geared for few years, but this is a bigger one that we’ll start seeing move through your P&L.And maybe something about the steps ahead, you mentioned that I think middle of the last year, you are insourcing a lot of the products, when did those products start flowing to retail and through your cost of goods? And then, I think you’re going to start pushing out some of the Innovate-to-Elevate ideas to that business as well.

Is that something that you think could start some organic revenue growth for that brand and some margin expansion after you’ve rebased it last year for some of the unproductive SKUs?.

Yeah, let me take this beginning with the internalization of production. We did begin that and we began to see the benefits of that roll through the P&L this year. We’re about halfway through the internationalization that we have undertaken.

We’ll complete the rest of it in the second half of this year, which will allow some additional synergies to roll into next year from an internaliazation standpoint.

From a standpoint of Innovate-to-Elevate and acquiring it, our first product line that we designed is actually will come to market in the fall of this year with our fall line and we’re excited about that because it allows us to bring into play, for example, our ComfortFlex Fit platform that’s so important to our other bra brands and bring it with a line called Fit 2 Flirt that will bring the department stores in the second half of the year and in the spring of the next year into the mass channel.

So, as we finish our brand consolidation strategy linked to our platforms and design, we think we have a real power now to unleash that the full power of Innovate-to-Elevate and drive the brand forward..

Okay. And then I think you mentioned that X-Temp would double this year and maybe just back up and talk about the Innovate-to-Elevate platform a little bit. I think you’ve commented in the past roughly where you are as a percent of the total portfolio that’s on that platform and maybe how that mix will evolve this year. Thank you..

Well, from the standpoint of our Innovate-to-Elevate platforms, you’re talking about ComfortBlend and X-Temp are the ones I think you’re asking. We pushed those across the basics business.

As I mentioned in my prepared comments, we will double the space behind X-Temp this year, which gives us a lot of room to continue to grow those platforms and I think it’s just exciting to us as we continue to see the upside and we pushed it not only across underwear but across our basic category with panties and into women’s panties and so forth.

So, tremendous success with those platforms and tremendous growth potential..

Thank you. And our next question comes from the line of Jay Sole from Morgan Stanely..

Hi, good afternoon..

Hi, Jay..

Just curious about -- let’s talk about the marketing strategy for a little bit.

You can talk about the level of spend as a percentage of sales you expect to do this year and how that might be different from last year and then just in terms of what kind of vehicles you want to use to market, is it TV, is it Internet, is it mobile and then what are maybe some opportunities to flex it up or down within the year if you see different opportunities to do.

Thanks..

Yeah, let me just talk about that. Overall, our spending is right in line with where it’s been historically. We feel really good about it.

In terms of total company spend, you got to remember there are segments like the -- some of the activewear or actually like a Knights Apparel, which actually doesn’t have media, so that might diluted on a total basis, but really think of it as a percentage of branded innerwear sales.

So, when you look at that from a US perspective, Jay, we’re right in line with where we’ve been historically. Feel good about it.Focusing a lot of our efforts on these technology platforms such as Ex-Temp that will see expand its space beginning this quarter. So, we feel really good about where we are. In terms of mix, it has been changing over time.

If you went back five years ago, predominantly it was all on TV and you’re seeing that mix and digital become a larger and larger percentage each and every year and that will continue. We actually haven’t talked about the specific trends but it’s definitely -- it’s not yet a majority, but it’s more than -- it’s more than a quarter..

Interesting.

And then, could you touch on just the ability to kind of flex it up or down if you see an opportunity that may be drive sales with something or maybe to pullback if it’s unnecessary to drive more profit?.

We have done that historically and in fact, one of the things that we are feeling really good about our overall momentum in the total business and we see an opportunity to continue to drive and platform will increase media spend.

You can do it actually in the spot market with fairly little notice if you want to use things like TV, online is also relatively easy.

And then historically, we have pulled back when we saw big things like the recession show up and we said look, at the end of the day, we need to pull back, because people weren’t in the stores and so, you’ve got the ability to flex it up and down with relatively little notice..

Thank you. Our next question comes from the line of Ike Boruchow from Sterne Agee..

Hi, everyone. Thanks for taking my question. Congrats on a great quarter. I guess I want to just take a quick step back and ask about your view of the European market. I assume that view would continue to evolve as you’re now there in a bigger way.

I guess what key learnings are coming up as you learn that innerwear market get a little bit deeper there and then how does that impact your potential decisions to enter new countries and new markets potentially through M&A or just organic growth?.

Sure, when we look at Europe, I think that certainly we understood going in and we still know that they’re struggling with some headwinds overall in the economy. We also know that Europe is a collection of countries rather than one place. And certainly we see improvement in certain countries faster than others.

In the south, for example, we are seeing nice positive trends in Spain or in Italy as we look at these economies. The great thing is DBA’s business is very much like our innerwear business here. It’s a branded business.

They have strong category or share positions within their categories and over time the consumer tends to buy a consistent number of units and that has been that way through the good and bad periods of the economy.

And so we think we’ve got a great platform which to build the business and as we execute our integration strategy, we’ve got a great platform to build on..

Great. Thanks..

Thank you. Our next question comes the line of Jim Duffy from Stifel..

Thanks. Hi, guys, good afternoon. Rick, couple of questions for you on the cash flow. What are the cash charges presumed in the $550 million to $600 million net cash from operations guidance.

And then the change in the GAAP guidance, is that entirely related to the addition of Knights Apparel or do you have higher expectations for charges with the Maidenform or DBA?.

You are talking about cash flow from operations, Jim?.

Correct..

Yeah. Actually the cash flow from operations guidance stayed flat and I wouldn’t increase it. The Knights Apparel we believe kind of is within the ranges of what we had originally put out there. And I kind of missed the first part of your question..

So I was looking at the charges $150 million to $170 million was the guide last quarter, close to $200 million or more, what of that is cash versus non-cash? And then with respect to that change, is that entirely related to Knights Apparel or are there more charges presumed for Maidenform and DBA?.

It’s about two-thirds cash one-third non-cash on that and the bulk of the increase was Knights Apparel. .

Okay.

And then just to be clear, that cash is contemplated in the cash flow from operations, correct?.

Yes, absolutely. Okay, I got it. .

Right. And that’s one of the reasons that as we added in Knights Apparel which obviously would give you cash flow from operations for some cash charges included in that, that also helped to offset it..

That’s right..

Great. Thanks a lot..

Thank you. And our next question comes from the line of Bob Drbul from Nomura.

Bob, your line is open, could you check your mute button?.

Hi, guys..

Hi, how are you doing?.

Good. I guess the two questions that I have, the first one is, Rich, on the inventory by one of your large retailers, I guess the thing that I struggle with is, end of March versus end of April from an inventory flex perspective, did you – I mean maybe elaborate a little bit more what you think was going on.

Was it just inventory or was it like quarter end for somebody? I am just trying to get a better hand on why was it drawn down so much at that point in time..

So historically you generally see inventories at retail even from a weeks of supply basis come down within their first quarter, so generally it’s going to be a February, March, April timeframe. So they generally come down. This year they tended to come down lower than we've seen in a number of years as actually Gerald talked about exclusively.

And I wouldn’t chock it up to more than just sort of the normal trend down and either they decided they were a little bit tighter overall in inventory and so they are managing things. Sometimes you’ve got different groups starting to manage things that are new and actually we’ve had system changes. A whole host of tactical reasons.

There is nothing that says this was some big systemic push by this retailer to dramatically change their turns on an ongoing basis. I just chock it up to the normal fluctuation and the normal downtrend in this quarter that tended to overshoot what we’ve seen historically.

And now, as Gerald said, we've already started to see it reverse in April, with the first couple of weeks. So it’s nothing that gives us cause for concern. It’s just the normal ebbs and flow of the business..

And just a question on sort of product.

Can you talk a little bit about the Tagless line, how has that been performing, what categories has that touched so far?.

Tagless has been with us for a decade now and it really started in the T-shirt business and we’ve pushed it across not only in our innerwear T-shirts, but now certainly it’s across all of our Activewear and underwear T-shirts if you will across print wear and the Champion and entire businesses we look at it.

From the standpoint of bottoms, we recently couple of years ago I guess now, put Tagless into our bottoms. So it’s a great example of Innovate-to-Elevate continuing to run for a long period of time, starting over a decade ago and still running strong..

Now we will have some of the chances to do that in Europe as well..

Exactly..

[Operator Instructions] Our next question comes from the line of Carla Casella from JPMorgan..

Hi. I had one clarification question on Knights or I guess seasonality question. If you look at the $160 million of revenue contribution this year, what’s the seasonality on that? I am assuming it’s a very different thing, your existing business because of the college year..

It has a strong of back-to-school focus to it as you might imagine, so it’s a fall-driven business. That’s not inconsistent with some of the seasonalities of our other businesses. It’s actually consistent with the seasonality..

Okay.

So it was the biggest theme than the third quarter or would it be the second and prep for the fall season?.

It’s a similar pattern. You start to see this build towards the end of the second quarter and then peak in the early part of the third quarter and then it drops as you get into the –.

Similar to what you would see with back-to-school kind of --.

Okay, and then when you include those DBA and Knights into full year, do you have an estimate of how -- what your Walmart exposure declines to or how much that would decline?.

I haven’t done the calculation. .

Okay. But I am assuming there is none of that because of Walmart DBA or Knights..

Well, Knights we actually sell through Walmart. A sizeable piece of that goes through Walmart, yes..

Okay..

In the past that was one of the attractions as Knight has a good strong position in collegian apparel and the mass chancel and so that now allows us to cover all channels from college bookstores, mid-tier as well as the mass channel. .

Thank you. And our next question comes from the line of Matt McClintock from Barclays..

Yes, good afternoon everyone..

Hey, Matt..

Sorry, if I missed this, because I got on a little late, but I was just wondering if you could discuss your pricing strategies in Europe, opportunities to maybe optimize price over in that region, what your efforts are doing right now in the region.

And then longer-term, is that optimizing price on existing product or should we think about that more as Innovate-to-Elevate opportunity? Thank you..

Sure, Matt. Let me answer a couple of elements to that question. First of all, certainly when Euro declined in value, it had a transaction impact on all companies in Europe that were sourcing offshore as they sourced in US dollars and had that transaction impact.

As we noted in the last call, the Euro fell off very quickly at the end of the year and most of the pricing was set for '15, but certainly as we look toward ’16, the best way to recover that transaction impact was through pricing and certainly we are in the early stages of developing those plans and we will be executing price increases in Europe for 2016.

Certainly as we complete our integration and we work with the design teams together in Europe, we also intend to implement our Innovate-to-Elevate strategy as well. And certainly that would help us optimize pricing as well..

Thank you very much..

Thank you. And that concludes our question-and-answer session for today. I would like to turn the conference back to T.C. Robillard for any closing comments..

I would like to thank everyone for attending our call today and we look forward to speaking with you soon. Have a great night..

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone have a good day..