The Champion brand rose by 18 percent in the second quarter globally, with growth of 16 percent in constant currencies. Without giving a specific figure for the revenues generated by the brand, the management of its parent company, Hanesbrands, confirmed its goal of reaching annual sales of $2 billion with Champion by 2022, despite the expected loss of a major contract with a big American mass market retailer, Target.
Excluding the mass market, Champion grew by 33 percent globally during the quarter as it continued to move upmarket, with higher sales outside the U.S., on the internet and in its own stores. In the U.S. alone, sales outside the mass market accelerated, booking an increase of 70 percent for the period. In the last four quarters, the brand's global sales outside the U.S. mass market have consistently grown by 20 to 30 percent year-on-year in local currencies. One of the reasons is that the acquisition of Champion's European business in 2016 has allowed Hanesbrands to coordinate product design globally.
The long-standing contract with Target is for a sub-brand of Champion, called C9, which will still generate sales of around $380 million this year. It will be phased out in July 2020, six months after the expiration of the contract. Target, which is now developing its own private labels, has been offering low-priced fitness-related apparel, shoes and even equipment under this brand.
Champion's growth was largely responsible for increases of 7 percent in Hanesbrands' activewear segment in the U.S. to $405.8 million in the latest quarter, but the organic sales increase was limited to 1.5 percent. The segment's operating profit declined by 3 percent to $57.5 million because of higher raw material costs, start-up manufacturing efficiencies and higher temporary distribution costs due to Champion's expansion.
Overall, Hanesbrands posted a sales increase of 4 percent to $1,715.4 million for the quarter, with an organic increase of 1.5 percent and direct-to consumer sales representing 22 percent of the turnover. Thanks mainly to Champion, the group's international sales rose by 15 percent to $545.8 million, with an increase of 12 percent in local currencies, and they generated 27 percent higher operating income of $76.5 million.
The group's adjusted operating profit declined by 6 percent to $245 million and net earnings fell by 18 percent to $140.6 million.
