(Filed Under wholesale Lingerie News). Hanes Innerwear sales, worldwide in the third quarter, were “up 8.4% over last year,” (excluding protective garments which, as a result of the pandemic, now make up a significant portion of sales for the division). Innerwear sales in the U.S., however, declined slightly in the three months ending September 26, 2020.
For HanesBrands as a whole, net income fell 44.2% to $103.3 million, as sales fell 3.1% to 1.81 billion.
The firm noted it “sold $179 million in personal protective garments globally. The year-ago quarter included net sales of $119 million from the now exited C9 Champion mass program and the DKNY intimate apparel license. Excluding the exited programs and the effect of changes in foreign exchange rates, total constant-currency net sales for third-quarter 2020 increased 2.6%.”
Meanwhile, the company reported significant increases in digital sales: “for the third quarter, online sales increased nearly 70% on a rebased basis through company e-commerce websites, retailer websites, large internet pure-plays, and business-to-business customers.”
During the conference call with analysts, CFO Barry Hytinen stated “U.S. Innerwear sales declined 3.5% compared to last year, driven by headwinds from retailer bankruptcies as well as softer apparel traffic trends. For the quarter, Basics revenue declined 2%, while Intimates was down in line with our expectations. Innerwear’s operating margin of 21% was down 110 basis points compared to prior year, due to volume mix and increased investments to support our Intimates business. And as previously discussed, higher commodity costs in the quarter were offset by pricing.”
Later in the call he added, “the midpoint of our fourth quarter revenue guidance assumes a decline of approximately 2% in our U.S. Innerwear segment. This outlook reflects improving sequential trends including the anniversary of the Sears bankruptcy.”
CEO Gerald Evans, in an answer to one analyst, stated, “despite the challenging environment, over the past year, our Basic shares have remained stable, while our Comfort Flex Fit and X-Temp innovations continue to expand. Our intimates business performed in line with our expectations for the quarter. Shapewear delivered its fifth consecutive quarter of sales growth, and we saw early signs of success with our bra innovations positioning our intimates business for improved revenue trends in the coming quarter.”
“Looking to the fourth quarter for total U.S. Innerwear, we expect sequentially improving revenue trends and strong margin improvement as we benefit from our brand investments in innovation. We anniversary a large retailer bankruptcy and we benefit from our price increases as commodity pressures have peaked.”
Evans summarized the strength in Hanes’ international Innerwear business: “there is growth across a number of geographies. The HanesBrand delivered nice growth across Mexico, Japan, Canada and Philippines. The Bonds brand and Bras N Things brand grew nicely in Australia, New Zealand and of course we saw Champion growth across the region.”
Looking ahead to the fourth quarter for the company as a whole, Hanes stated “net sales are expected to be approximately $1.60 billion to $1.66 billion. Included in our sales outlook is approximately $50 million of protective garment sales and approximately $10 million of foreign exchange benefit.” — NM
The full transcript of the conference call can be found here: https://www.fool.com/earnings/call-transcripts/2019/10/31/hanesbrands-inc-hbi-q3-2019-earnings-call-transcri.aspx
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