(Filed Under Financial and General Interest News). Hanes Innerwear division operating profit dropped 32.4% in the third quarter as sales for the segment fell 11.0%.
In the three months ended October 1, Innerwear operating profit was $99.797 million, compared to $147.651 million in the same period last year. Sales were $625.082 million compared to $702.617 million in the quarter ended October 2, 2021.
Explaining the Innerwear results the company stated: “The year-over-year sales performance was driven by macroeconomic pressures that weighed on consumer spending as well as the impact from retailer actions to manage inventory. Although the company’s inventory at retail was below prior year, retailer actions to tightly manage overall inventory levels negatively impacted near-term replenishment orders and delayed the timing of certain events. These pressures more than offset the benefits from the first-quarter price increase and retail space gains.” It added that various “headwinds more than offset innerwear growth in Australia and the other Americas.”
Hanes explained that Innerwear “operating margin of 16.0% decreased 505 basis points compared to prior year. The impact from input cost inflation, lower sales volume, manufacturing time-out costs and an unfavorable product mix more than offset the benefit from higher prices and SG&A cost controls.”
As part of its strategy to grow Innerwear sales the company said a “robust pipeline of new products and innovations continues to roll out to younger consumers. In addition to the successful launches of Hanes Total Support Pouch with X-Temp and Hanes Retro Rib, the company continues its journey to get younger in innerwear with the roll out of new products from its robust innovation and product pipeline. Beginning in the fourth quarter, the Hanes Originals product line will be available in certain retail channels followed by expanded distribution in early 2023. Hanes Originals consists of enhanced core men’s and women’s innerwear products with a fit and style aimed at younger consumers.”
Hanes added that in its Maidenform brand portfolio it “launched a seamless collection of bras and underweardelivering stretch-to-fit comfort as well as a lace-based shapewear short that combines shaping with style. These
Maidenform products, aimed at younger consumers, quickly became top sellers on maidenform.com with expanded distribution for bras beginning in 2023.”
Over the longer term, CFO Michael Dastugue noted, during the conference call to discuss the financial results, that “U.S. Innerwear, sales increased 25% over 2019 with double-digit growth in each of our businesses, including socks, kids, women’s and men’s. Consumer demand across our Innerwear brand portfolio is driving strong point-of-sale trends and increased market share, while pent-up consumer demand is fueling category growth rates above historical levels. We’re seeing momentum from our innovations and increased media investments, with particular strength in our Maidenform and Bali shapewear and bra products.” He added that “with respect to our international Innerwear businesses, sales were consistent with 2019. We experienced strong growth in the Americas, while sales in Australia declined due to COVID-related lockdowns.”
During the call CEO Stephen Bratspies added, “we’re seeing strong consumer response and returns from our increased marketing investments, particularly in intimates. Our consumer need-based innovation strategy is delivering great new products. Investment behind our Maidenform Tame your Tummy shapewear product, our Maidenform One Fab Fit bra and our Bali Easylite bras has driven increased market share as well as retail space gains and incremental distribution. And Total Support Pouch continues to exceed our expectations. We have plans in place to expand the franchise globally and introduce additional product features to continue to win in men’s underwear.”
For Hanes as a whole, which produces a variety of other apparel, earnings were $80.101 million on sales of $1.671 billion, compared to a profit of $151.777 million on sales of $1.790 billion in the third quarter last year. — NM
A transcript of the full call can be found here: https://www.fool.com/earnings/call-transcripts/2021/11/04/hanesbrands-inc-hbi-q3-2021-earnings-call-transcri/
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