(Filed Under Financial and General Interest News). Hanesbrands second quarter Innerwear division operating profit fell 23.9% to $141.659 million, as sales for the division dropped 12.2% to $685.778 million. The segment reported operating profit of $186.169 million on sales of $780.650 million in the 13 weeks ended July 2, 2021.
Hanes blamed the sales decline on a ransomware attack on May 24, which disrupted operations for a time, and “softer-than-expected point-of-sale trends” that “more than offset the benefits from the first-quarter price increase and retail space gains.” It continued that “on a two-year stack basis, Innerwear sales increased 50% in the quarter. Operating margin of 20.7% decreased approximately 320 basis points compared to prior year. The impact from input cost inflation, lower sales volume, and an unfavorable product mix more than offset the benefit from higher prices” and various cost control measures.
Hanes pointed to a “robust pipeline of new products and innovations that extends beyond 2023,” and stated that “new innerwear products and innovation is driving positive consumer and retailer response as well as additional retail space gains. New products have launched across men’s and women’s, including Hanes Total Support Pouch with X-Temp and HanesRetro Rib. The company is also building global innovation platforms around absorbency, which represents a meaningful opportunity for the Bonds and Hanes brands across multiple new usage occasions.”
Hanes, which also has divisions that offer a variety apparel, complained about margin declines “driven by impact from lower sales volume, input cost inflation, the incremental costs associated with the cyber event and foreign currency exchange rates. These headwinds more than offset the benefits from business mix, the first-quarter price increase in its Innerwear business, cost savings and less air freight.”
The company reported the ransomware attack “temporarily affected the company’s global supply chain network and limited its ability to fulfill customer orders for approximately three weeks. Despite the disruption, the company shipped all Innerwear back-to-school seasonal commitments on time and in full,” adding that it “believes the cyber event has been contained. There is no ongoing operational impact on the company’s ability to provide its products and services. The company estimates the cyber event negatively impacted the second-quarter 2022 results by approximately $100 million in net sales, $35 million dollars in adjusted operating profit, and $0.08 in adjusted earnings per share.”
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