- Prachi Singh |
First-quarter net sales at HanesBrands were 1.32 billion dollars compared with 1.59 billion dollars a year ago. The company said in a statement that year-ago quarter included net sales of 94 million dollars from the now exited C9 Champion mass program and the DKNY intimate apparel license. Excluding the exited programs, the impact of Covid-19, and foreign exchange rates, the company added, total constant-currency net sales for the first-quarter 2020 would have increased 1.6 percent. First-quarter GAAP operating profit and adjusted operating profit were 34 million dollars and 63 million dollars, respectively, compared with 150 million dollars and 171 million dollars a year ago, respectively. GAAP and adjusted EPS were negative 2 cents and 5 cents, respectively, compared with 22 cents and 27 cents a year ago, respectively.
“We were on a pace to deliver a strong first quarter above our expectations until the late quarter impact of the Covid-19 pandemic,” said Hanes Chief Executive Officer Gerald W. Evans Jr., adding, “Prior to the pandemic impact, sales for our U.S. Innerwear business were significantly better than our expectations. Champion was a driver of better-than-planned U.S. Activewear growth, and our international businesses were in line with expectations. The effects of the pandemic changed those trajectories.”
Highlights of Q1 performance of HanesBrands’ business segments
The company added that it continues to generate sales through channels of trade that have remained open during the pandemic, including online, mass retail, dollar store, and food and drug. Total online sales increased 5 percent globally in the first quarter. The company is making more than 320 million cloth face coverings and more than 20 million medical gowns for the U.S. government. In addition, the company is also ramping up production to launch a cotton facemask business for consumers and business-to-business customers, including large employers seeking to reopen business operations. Sales in 2020 are expected to be more than 300 million dollars and the company believes the business has the potential to expand further in future years.
International segment sales declined 14 percent while operating profit decreased 48 percent, while on a constant-currency basis, net sales decreased 11 percent and operating profit decreased 47 percent affected by the global Covid-19 pandemic. In addition to wholesale business declines, approximately 1,000 of the company’s 1,200 brand stores, which closed in March, are located in international geographies.
The company further said that prior to mid-March, U.S. Innerwear segment sales and profit were trending significantly better than expected with net sales down less than a percentage point. As reported for the full quarter, net sales decreased 11 percent while operating profit decreased 22 percent, both affected by the pandemic and exit of the C9 Champion mass retail program. When year-ago results are rebased for program exits, segment net sales decreased 9 percent and operating profit decreased 21 percent.
U.S. Activewear segment first-quarter sales decreased 29 percent or 117 million dollars, as a result of the Covid-19 impact and 85 million dollars of C9 Champion sales in mass retail in the year-ago quarter. When the year-ago quarter is rebased for the C9 Champion program exit, net sales decreased 10 percent. Operating profit decreased 81 percent as reported and decreased 66 percent on a rebased basis.
Due to the uncertainty and unpredictability of the Covid-19 pandemic, HanesBrands withdrew its first-quarter and full-year guidance on March 25, 2020. Until visibility of the pandemic’s effect on global economies improves, the company said, it will not provide quarterly and full-year guidance and expectations.