B2C is a early opportunity. We’ve made progress. I think if you look at our site, it’s much better than it was a year ago. But it’s not where it needs to be. Footwear still a big opportunity and an opportunity just across the portfolio in general. So near term, there’s some challenges in the brand as we continue to work through inventory. But the team is being very aggressive. We’re going to see good growth in Asia, led by Japan, the collegiate channel has rebounded. We’ve talked about that over a number of calls in the past two years. And we expect it to continue to grow as we go forward. And we’re reaching new campuses. We’re in a much deeper relationships with those campuses. We’ve got good merchandising capabilities in that space. We are seeing good student response.
We’re seeing positive price mix in that area. So lots of good things there. And we’re going to continue to focus on channel strategy and being really specific about where we need to go. And early on, we’re getting good response from retailers. They like where we’re going. They want this brand to win, that plays a really important role for them. And they liked the work that we’re doing going forward. So work to be done on the brand, but confident in where it can go and what it stands for, and the work that the team is doing. And we’re starting to see some interesting innovation in reverse weave and some new product for our pinnacle accounts. Our TSP product from innerwear is going to cross over and now go into Champion business this year, working on the absorbency category for Champion as well as our innerwear business.
So innovation is coming. We’re going to continue to lean into innovation, continue to build the brand, continue to be a more disciplined operating company around the brand and how we go to market. And I’m confident that it’s going to — it’s going to continue to improve, but we have work to do this year for sure. And then on the dividend, I think what’s clear to know is our focus right now is around paying down debt. And that’s what we announced today, and that’s where we’re going to put our free cash flow book. The board is always evaluating capital allocation, both the short-term and the long-term. But right now, our focus is on reducing debt. And we think if we reduce debt and we continue to deliver against the full potential plan, that’s what will drive the higher shareholder returns in the long run.
David Swartz: Did the market require you to eliminate your dividends for the refinancing?
Michael Dastugue: No the amendment, the basket does allow us to pay a dividend of upto $75 million annually. So to Steve’s point we thought it was prudent to utilize all of the cash after we’ve made the investments in the business to retire debt.
David Swartz: Okay, thanks for all the information today. Thanks.
Operator: Our next question comes from the line of William Reuter with Bank of America.
William Reuter: Good morning. I have two. The first is there was good commentary when you broke out the difference between inventory units and what amount of that was due to higher average unit costs. When you look at this year, what you’re seeing in terms of lower cotton costs, as well as lower freight? How should we think about where your average unit cost might be I don’t know six months from now or towards the end of the year?
Steve Bratspies: Yes, yes, I would, I don’t know that we’re going to give you a specific guidance. But I think I would tell you that the cost that we are seeing today in terms of either what we manufacture the input costs for cotton for free, those costs are coming down. And so you will see the margins in Q3, and especially in Q4 start to improve because our costs are coming down, currently, relative to where we were 6 to 12 months ago.
