For the fourth quarter, HanesBrands Inc. reported a net sales decrease of 16 percent to 1.47 billion dollars, which includes a 55 million dollars unfavourable impact from foreign exchange rates, compared to last year.
On a constant currency basis, net sales decreased 13 percent. The constant currency decline, the company said in a release, was due to the macro-driven slowdown in consumer spending in the U.S. and certain international markets coupled with the continued impact to orders in the U.S. from retailers’ decisions to reduce broader inventory positions.
HanesBrands continues to expect to achieve its long-term financial targets of approximately 8 billion dollars in net sales and an approximate 14.4 percent operating margin. The company now expects to achieve these targets at the end of 2026.
“We delivered fourth-quarter results at or above our guidance as we continue to take actions to navigate the extremely challenging environment,” said Steve Bratspies, the company’s CEO.
Highlights of HanesBrands’ Q4 performance
The company added that Global Champion brand sales decreased 18 percent on a reported basis as compared to prior year, with a 21 percent decline in the U.S. and a 13 percent decline internationally. In constant currency, Global brand sales decreased 14 percent, with a 3 percent decline internationally.
As compared to prior year, constant currency sales increased in Asia and Australia. This growth was essentially offset by soft consumer demand and retailer inventory actions in the U.S. as well as a decline in Europe.
Gross profit of 502 million dollars declined 25 percent as compared to prior year. Gross margin was 34.1 percent, down from 38.1 percent in the prior year, while adjusted gross profit was 505 million dollars and adjusted gross margin of 34.3 percent declined approximately 415 basis points compared to prior year.
Operating profit and operating margin in the fourth quarter were 60 million dollars and 4.1 percent, respectively, which compared to 156 million dollars and 8.9 percent, respectively, in the prior year. Adjusted operating profit of 83 million dollars declined from 220 million dollars in fourth-quarter 2021 and adjusted operating margin of 5.6 percent declined approximately 695 basis points from prior year.
Loss from continuing operations totaled 418 million dollars or 1.19 dollars loss per diluted share compared to income from operations of 68 million dollars or 19 cents per diluted share, last year. Adjusted income from continuing operations totaled 24 million dollars or 7 cents per diluted share compared to adjusted income of 156 million dollars or 44 cents per diluted share, in fourth-quarter 2021.
Fourth quarter business segment results under HanesBrands
The company further said that innerwear sales decreased 19 percent compared to last year driven by macroeconomic pressures that weighed on consumer spending as well as the continued impact to replenishment orders from retailers’ decisions to reduce broader inventory positions. These pressures more than offset the benefits from the first-quarter 2022 price increase and retail space gains.
Activewear sales declined 16 percent compared to last year as continued growth in the collegiate channel for both Champion and Hanes brands was more than offset by declines in other channels due to lower point-of-sale trends and higher Activewear inventory levels at retail. By brand, Champion sales within the activewear reporting segment decreased 21 percent, while sales of other activewear brands decreased 8 percent.
International sales decreased 12 percent on a reported basis, including the 55 million dollars from unfavourable foreign exchange rates. International sales decreased 2 percent on a constant currency basis as growth in Asia was offset by declines in Australia, the Americas, Europe and Canada.
Review of HanesBrands’ full year results
For the full year, net sales decreased 8 percent to 6.23 billion dollars, which includes a 182 million dollars unfavourable impact from foreign exchange rates, while on a constant currency basis, net sales decreased nearly 6 percent.
Gross profit of 2.22 billion dollars declined 16.2 percent, while gross margin was 35.6 percent, down from 39 percent in the prior year. Adjusted gross profit was 2.24 billion dollars and adjusted gross margin of 35.9 percent, declined approximately 320 basis points compared to prior year.
Loss totaled 131 million dollars or 37 cents loss per diluted share compared to income from continuing operations of 521 million dollars or 1.48 dollars per diluted share, last year. Adjusted income totalled 342 million dollars or 98 cents per diluted share compared to adjusted income of 645 million dollars or 1.83 dollars per diluted share, in full-year 2021.
HanesBrands expects marginal decline in FY23 net sales
For fiscal 2023, the company currently expects net sales of approximately 6.05 billion dollars to 6.20 billion dollars. At the midpoint, this represents an approximate 1 percent decline as compared to prior year on a constant currency basis and a 2 percent decline on a reported basis. GAAP operating profit from continuing operations is expected to range from approximately 446 million dollars to 496 million dollars, while adjusted operating profit is expected to range from approximately 500 million dollars to 550 million dollars.
GAAP earnings per share from continuing operations are expected to range from approximately 14 cents to 25 cents and adjusted earnings per share to range from approximately 31 cents to 42 cents.
For first quarter 2023, the company currently expects net sales from continuing operations of approximately 1.35 billion dollars to 1.40 billion dollars. At the midpoint, this represents an approximate 11 percent decline as compared to prior year on a constant currency basis and a 13 percent decline on a reported basis.
GAAP operating profit is expected to range from approximately 39 million dollars to 59 million dollars and adjusted operating profit to range from approximately 50 million dollars to 70 million dollars.
GAAP loss per share is expected to range from approximately 14 cents to 9 cents and adjusted loss per share to range from approximately 9 cents to 4 cents.