Hanesbrands has reported a drop in net income to $128.7 million for the second quarter ended July 3 from $161.2 million in the year-ago period, largely due to charges of $43.8 million related to the divestiture of its European Innerwear business. On an adjusted basis, income from continuing operation rose slightly to $165 million from $162 million.
The gross margin expanded by 5.6 percentage points to 38.9 percent, thanks in part to foreign exchange gains, which were partly offset by higher shipping costs. The adjusted operating margin decreased by 1.7 percentage points to 13.5 percent, due in part to the strong cost savings made last year.
The group’s revenues from continuing operations rose by only 13 percent to $1,751.3 million, with a 10 percent increase in local currencies, driven by the Champion brand and the U.S. Innerwear business, but they would have been 88 percent higher without temporary revenues of $614 million from the sale of face masks, whose production has been discontinued. They were nevertheless up by 15 percent from the comparable 2019 period. International sales jumped by 91 percent to $478.9 million as compared to a year ago, rising by 70 percent on a constant-currency basis.
The group said that Champion’s sales were 120 percent higher globally than in the same quarter of last year. They were also 21 percent higher than in the second quarter of 2019, with increases of 20 percent in the U.S. and 15 percent in the rest of the world. In the U.S., they were aided by the government’s consumption stimulus package.
Sales of activewear jumped by 140 percent to $404.2 million, rising by 15 percent from 2019, driven by the Champion and Hanes brands, with big gains in sports and college licensing. The segment generated an operating profit of $41.0 million against a loss of $5.8 million a year ago.
Prospects for an additional stimulus in the form of child tax credits is expected to boost Hanesbrands’ total revenues for this year to between $6.75 and $6.85 billion, or $550 million more than previously projected. That would compare with $6.13 billion in 2020 – including $820 million from personal protection equipment – and $6.80 billion in 2019.
