Hanes: Focused On Underwear

New bras from Hanes: Women’s Longline Bralette (Plus Size) and Hanes Women’s Seamless Racerback Bra on the company website.

Hanes reported a significant Q2 loss and decline in sales as it transitions out of its Champion and outlet store businesses and focuses on underwear.

Hanesbrands lost $298.380 million on net sales of $995.393 million in the three months ended June 29, compared to a loss of $22.464 million on sales of $1.035 billion in the same period last year.

In June the company had announced it was selling its Champion sports apparel business to Authentic Brands Group for $1.2 billion plus potential earn out. And it explained that “beginning in second-quarter 2024, global Champion and U.S. outlet store businesses have been reclassified to discontinued operations.” Overall, “net sales from continuing operations decreased 4% compared to prior year as sales declines continued to moderate, as expected. On an organic, constant-currency basis, net sales decreased 1%.”

CEO Stephen Bratspies explained that the $900 million of net proceeds from the Champion sale will be used to”pay down debt and further delever our balance sheet.” He added that “by exiting these lower-margin businesses, we have fundamentally strengthened the company, creating a more focused, simplified business, one with more consistent top-line growth, higher margins, strong cash generation, a wide competitive moat, and multiple levers to unlock shareholder value over the next several years.”

During the call to discuss the results, CFO Scott Lewis described a transformed company where, now, in the U.S. “90% of the businesses is innerwear.” He continued, “sales decreased 1% compared to last year, which exceeded our expectations. While we continue to face a challenging environment with consumer spending headwinds and high inventory management of select retailers, we’re seeing that our strategy is working and we’re continuing to win in the marketplace. In the quarter, we gained another 40 basis points of market share in innerwear, as increased marketing investments and product innovation are driving point-of-sale trends that continue to outperform the market. With respect to innovation, we saw strong growth in our Hanes Originals and Maidenform M product lines. And we launched Bali Breathe, which is our biggest innovation behind the brand in over a decade.”

“In our international business, sales increased 2% over prior year on a constant currency basis. Our Australia business, which represents roughly two-thirds of the segment, decreased at a mid-single-digit rate as lingering high interest rates continue to weigh on consumer spending.”

CEO Bratspies emphasized that going forward, “post-divestiture. Hanesbrands is a powerhouse in basics and innerwear with a global footprint. We’re relatively evenly split between men’s and women’s and we operate in a category that is core and essential for consumers.”

He offered that “while the pandemic and the current macroeconomic environment have created a period of volatility, long term, we’re confident this remains an attractive and stable category. We own a portfolio of iconic brands that hold the number one or number two market share position in their categories, including Hanes, Bonds, Bali and Maidenform.”