Dive Brief:
- HanesBrands reported net sales of $1.16 billion for the first quarter, a 17% year-over-year decrease, which the company attributed to the divestment of its U.S. sheer hosiery business and the “unfavorable impact from foreign exchange rates,” according to a news release Thursday.
- The company’s innerwear business saw an 8% sales decrease, but HanesBrands said its strategy “of consumer-centricity is working.” The segment gained an additional 50 basis points of market share, the company said, due to operating model enhancements, new product innovation and higher levels of brand marketing investment. The company previously said it wanted to build this segment in 2024.
- Global brand sales for Champion fell 26% year over year. Despite the brand logging growth in Japan, China and Latin America, international sales fell 17%, with growth offset by decreases in Europe and Australia. U.S. sales fell 35%.
Dive Insight:
HanesBrands has been evaluating options for its Champion business since last year, which the company said could include a sale or other transaction. The company hasn’t set a timetable for completion of the assessment and didn’t provide an update Thursday.
Part of that review involves positioning Champion for growth, and in the months since the plan was announced, HanesBrands named a new vice president and chief marketing officer for the brand, relaunched its Zone 93 sneaker, and debuted a sustainable collection of crewnecks and joggers.
Activewear sales have been a pain point for HanesBrands for several consecutive quarters.
Sales for the category fell 31% to $97 million in Q1. The company said about two-thirds of this decline was due to shifting the Champion kids’ business to a license model, an “unseasonably strong collegiate sales performance” in the same quarter last year, and accelerated orders in the first quarter of 2023.
It attributed the remainder of the decrease to “challenging activewear apparel market dynamics, including soft consumer demand and cautious ordering from retailers,” and the near-term impact of actions taken to improve the Champion brand.
Meanwhile in the innerwear segment, sales from new product innovation grew 19% year over year. Marketing investments doubled to support the Maidenform M product line and the Hanes SuperSoft product line, per the release.
The company reaffirmed its full year outlook, which forecasts net sales of between $5.35 billion to $5.47 billion, about a 4% decrease over the prior year.
“Over the past three years, we’ve taken necessary actions across the business to enhance and strengthen both the operating and financial models of the Company,” Steve Bratspies, CEO, said in the release. “With our leading brand positions, lower fixed-cost structure, reestablished gross margin, consistent cash generation and a commitment to reduce debt, we have created a multi-year flywheel designed to accelerate earnings, deleverage faster, and invest in growth initiatives, which we believe will drive strong shareholder returns over the next several years.”
