HanesBrands net sales for Q4 decreased 12% compared to the prior year with its Champion brand sales decreasing 23% globally on a reported basis by almost a third in the US market (30%).
The company attributed the decline to a combination of challenging activewear apparel market dynamics and the expected topline headwinds from the strategic actions HanesBrands is taking to strengthen the Champion brand and position it for “long-term profitable growth".
In its latest results, sales of innerwear declined by 1%, while sales of activewear saw a significant drop of 24% with decreases across channels and brands.
The company said this is down to ongoing challenges in the activewear apparel market, such as subdued consumer demand and cautious retailer orders.
International sales saw a 7% decline when measured on a constant currency basis compared to the previous year. Despite innerwear growth in the Americas and Champion's expansion in China, this increase was overshadowed by a decrease in Australia which was due to a “very challenging macroeconomic environment.”
Additionally, Champion experienced declines in Europe, Japan, and Canada.
This was despite the company's global Champion performance plan, which includes actions and related charges regarding the company’s accelerated and enhanced strategic initiatives to further streamline operations and position the brand for long term profitable growth.
Steve Bratspies CEO of HanesBrands commented: “Our fourth quarter performance did not meet our 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."
However, he continued: “Importantly, we exceeded our year-end goals in all four key 2023 performance metrics, including gross margin, inventory, operating cash flow and debt reduction.”
Key HanesBrands Q4 results:
- Net sales decreased 12% to $1.3bn
- Operating income was $96m compared to $60m the prior year
- Net income was reported at $77m.
Gross profit of $494m decreased 2% while gross margin increased 400 basis points to 38.1% as compared to the prior year. Adjusted gross profit was $495m and adjusted gross margin of 38.2% increased 395 basis points.
HanesBrands forecasts a 4% drop in FY24 sales
The clothing company expects net sales of $5.35bn to $5.47bn for the fiscal year 2024 (ending 28 December 2024), representing a 4% decline compared to the previous year on a reported basis of 2% on an organic constant currency basis.
HanesBrands predicts GAAP operating profit of $430m to $450m, adjusted operating profit of $500m to $520m, GAAP earnings per share of $0.22 to $0.28 and adjusted earnings per share of $0.42 to $0.48.
For the first quarter which ends on 20 March 2024, the company expects net sales of $1.13bn to $1.19bn, representing a 16% decrease on a reported basis and a 14% drop on an organic constant currency basis.
GAAP operating profit is expected to reach $45m to $65m and adjusted operating profit is expected to be $60m to $80m. GAAP loss per share is forecasted at $0.14 to $0.08 and adjusted loss per share of $0.10 to $0.04.
