Hanesbrands, the parent company of Champion USA, is about to take a new direction. After releasing mixed results for the third quarter, the group’s new chief executive, Stephen Bratspies, said it is conducting an in-depth review of its business to develop a growth strategy better tailored to the post-pandemic world, promising that it will start in the fourth quarter. The review includes an evaluation of the company’s global portfolio, its supply chain and business segments, in a bid to become more agile and consumer-centric. In particular, it is intended to support the momentum in the Champion brand globally and intimate apparel in Australia, especially online.
In the third quarter, Hanesbrands’ net income dropped by 44 percent to $103.3 million, as revenues declined by 3.2 percent from the year-ago quarter to $1,808 million, although this was better than expected. The quarter included revenues of $119 million from the now exited C9 Champion mass market program and the DKNY intimate apparel license. Excluding this and the effect of changes in foreign exchange rates, sales increased by 2.6 percent in the quarter of 2020, thanks also to the addition of $179 million in facemasks and other personal protective equipment (PPE) globally due to the pandemic.
The sports apparel business was hampered by cancelled sports events and the closure of college bookstores. The Champion brand’s sales declined by 27 percent, but surged by around 130 percent sequentially from the second quarter, driven by strong point-of-sale trends and continued online growth. The segment’s operating profit was down by 60 percent to $29.6 million.
Champion is part of the group’s Activewear Segment, where sales were off by 41 percent. However, in the Innerwear Segment, sales increased by 37 percent, driven by sales of protective garments. Revenues from other businesses dipped by 24 percent.
In the International segment, which includes Champion’s operations outside the U.S., sales declined by 5 percent in reported terms and by 7 percent in constant currencies, which was a significant improvement from the 44 percent drop suffered in the second quarter. Operating profits fell by 10 percent. Growth in the Americas and at Champion Europe in constant currencies was more than offset by declines in the company’s European innerwear, Asia and Australia businesses, where Covid-related challenges continued to slow the retail recovery.
Looking ahead to the fourth quarter, the management expects a sales decline of about 2 percent from last year. It expects innerwear sales to improve, but activewear should decline, despite a sequential improvement for Champion. International sales are expected to fall due to continued pressure from the pandemic.
The company noted that it has sufficient cash, however, ending the period with about $2.0 billion of total liquidity.
