Dive Brief:
- HanesBrands reported $1.3 billion in net sales for Q4, a 12% year-over-year decrease, according to the company’s Thursday earnings report.
- Sales in the company’s activewear segment decreased 24%.The company attributed the decline to challenges in the wider activewear apparel market, softer consumer demand and cautious ordering from retailers. The Champion brand fell 23%, while HanesBrands works to reposition it for long-term profitable growth.
- Steve Bratspies, HanesBrands CEO, said the company is looking to build its innerwear category in 2024, since the segment gained more market share with younger consumers in the last fiscal year, despite sales falling 1% in Q4.
Dive Insight:
In its earnings release, the company said that despite “a challenging sales environment,” it exceeded its year-end goals in some of its performance metrics, including gross margin, inventory, operating cash flow and debt reduction.
The company ended the fiscal year with less than $1.4 billion in inventory, which it said was predominantly driven by the company’s “SKU discipline and lifecycle management.” This was ahead of expectations and represented a 31% improvement year-over-year. Reducing inventory through SKU reductions has been a focus for HanesBrands throughout the fiscal year.
Steve Bratspies, HanesBrands CEO, said in the release that the company’s Q4 performance didn’t meet expectations as the “sales environment proved to be more challenging than expected.”
“However, we saw several positive indicators that give us confidence margins and leverage have reached a positive inflection point and demonstrate progress on our strategy to simplify our business, reduce inventory, cut costs, and reignite Innerwear,” Bratspies said. “...During the quarter, new products and permanent retail space gains drove increased market share in U.S. Innerwear, which we expect to build upon as we rollout another record year of innovation and increase our brand marketing investments. For 2024, we believe we’re well positioned for continued margin improvement, another year of strong cash generation and continued debt reduction.”
In Q4, the company’s innerwear segment decreased 1%. HanesBrands said it gained additional market share with both men and women, “despite a 5% decrease in the market.” It said the strongest gains were from younger consumers, led by some of the brands in its innovations category, including M by Maidenform and Hanes Originals.
Champion has been a focal point for the company throughout the fiscal year. In September 2023, the company struck a license agreement for the brand with G-III Apparel Group, and later announced it was evaluating its options for the business, including a potential sale. In the months since that announcement, HanesBrands named a new global vice president and chief marketing officer for the brand, as well as relaunching its Zone 93 sneaker and launching a sustainable collection of crewnecks and joggers.
For the entire 2023 fiscal year, the company’s net sales fell 9.6% to $5.6 billion. The innerwear segment saw a 0.6% drop, and the activewear segment experienced a 19.5% decline. International sales fell 8.7% in the year.
Meanwhile, HanesBrands will lay off nearly 160 employees at a North Carolina distribution center effective April 5, as it plans to repurpose the facility in Winston-Salem. The company didn’t elaborate on what that transition would entail or reference this in its earnings release.
