Hanesbrands senior management described Champion’s European business as “holding ground” in a tough market with a challenged consumer, with Footwear performing well. However global sales are down and the company has announced measures to move forward the purpose of the brand and revised its FY23 outlook.
Champion under pressure in US
Wholesale headwinds in the European geography could cause second half issues. Hanesbrands is not pleased with Champion’s performance in its home US market, where results will continue to be pressured in H2.
Champion global sales fell by 16 percent on a reported basis year-over-year with the brand’s US business down by 25 percent and international up by 1 percent.
The label is experiencing its strongest growth in Japan, helped by new products and channel segmentation, and is growing in China through new stores, localized product assortments, and new footwear franchises. Business in Australia was down in Q2 due to a very challenging macroeconomic environment there.
Hanesbrands’ Activewear segment reported a Q2 operating loss of $3.1 million against a profit of $22.9 million as sales slipped by 19 percent to $267.5 million from $330.4 million.
Champion to simplify SKU
Starting with the Fall/Winter 2024 selling season, Champion will offer a global product line with nearly one-third of the 2024 product assortment and fabric platforms available worldwide. The company says the move will reduce SKU complexity and drive additional cost savings starting in 2024.
The parent company Hanesbrands, which is working to “simplify the complexity” of Champion moving forward, has also created a new global purpose for the brand: “Champion a Better Tomorrow.”
The company has hired new brand leadership to coordinate Champion’s focus on design, merchandising and sales going forward.
Hanesbrands, whose revised FY23 outlook calls for net sales from continuing operations of $5.80 to $5.90 billion, says product input costs have fallen significantly. These include a 40 percent year-over-year drop in cotton prices and 80 percent decline in freight expenses.
FY23 adjusted operating income from continuing operations is pegged at $130 to $150 million.
Activist investor demands changes at Hanesbrands
It remains to be seen whether the proposed changes will satisfy Barington Capital Group, a New York hedge fund manager which sent a five-page letter to Hanesbrands’ Chairman Ronald L. Nelson on Aug. 7, demanding significant changes at the apparel firm and parent of Champion.
