HanesBrands’ sales drop 14% in Q2

Net sales of US-based HanesBrands from continuing operations were $1.51 billion, a decline of 14 per cent in the second quarter of fiscal 2022, over the prior year. The lower-than-expected sales performance was driven by the impact of the previously announced ransomware attack as well as softer-than-expected point-of-sale trends.

Net sales, excluding PPE, increased 75 per cent on a two-year stack basis. Global Champion brand sales decreased 20 per cent over the prior year in constant currency, or 23 per cent on a reported basis with similar declines in both the US and internationally. On a two-year stack basis, constant-currency Champion brand sales increased 96 per cent globally, the company said in a press release.

Gross profit of $572 million declined 16 per cent compared to prior year. Gross margin was 37.8 per cent, down from 38.9 per cent in the prior year. Adjusted gross profit, which excludes certain costs related to the company’s full potential plan, was $573 million compared to $684 million last year. The adjusted gross margin of 37.8 per cent declined approximately 120 basis points compared to the prior year. The margin decline was driven by impact of the lower sales volume, input cost inflation, the incremental costs associated with the cyber event and foreign currency exchange rates. These headwinds more than offset the benefits from the business mix, the first-quarter price increase in its Innerwear business, cost savings and less air freight.

“Our second quarter results fell below our expectations as a result of unexpected events and the difficult global operating environment,” said Steve Bratspies, CEO. “Despite the challenges, we continue to make progress on our full potential plan. We are in the early stages of our strategic supply chain initiatives. Our innovation pipeline is more robust than it has been in years, and we continue to invest in building our global brands. I want to thank our associates around the globe for their ongoing commitment to serving our consumers and customers.”

The company has taken a more prudent view of its second-half net sales and profit outlook to reflect the changes in foreign currency exchange rates; short-term costs associated with actions to reduce inventory by year-end; and an assumption that slow consumer demand continues and the retail environment remains challenging.

For the third quarter of 2022, the company currently expects net sales from continuing operations of approximately $1.73 billion to $1.78 billion, which includes a projected headwind of approximately $58 million from changes in foreign currency exchange rates. At the midpoint, this represents 1 per cent growth over the prior year on a constant currency basis, or a 2 per cent decline on a reported basis.