Despite a challenging second quarter for the business, Hanesbrands continues to make global investments and possesses high aspirations for Champion activewear. Facing a difficult comparison, Champion, a significant part of the group’s activewear segment, posted a 25 percent sales decline. Overall, the group’s activewear segment suffered a 44 percent decline in quarterly operating profit to $22.9 million from $41.0 million for the period ended July 2. Activewear quarterly sales were down by 18.3 percent to $330.4 million from $404.2 million, with sales of all brands, with the exception of Champion, down 8 percent.
Three issues contributed to the Champion fall-off in the period. Namely, service challenges, product delays and a “consumer slowdown” in the middle of the quarter that contributed to excess inventory building in the retail channel. Additionally, the group had to contend with three weeks of delivery impacts from a May “cyber event” on its businesses and Covid-related headwinds in China.
Nonetheless, the Champion business remains vital in Hanesbrands’ full potential plan, according to company CEO Steve Bratspies. Areas targeted for brand growth include an expanded women’s offering, kids, expansion into new markets such as China, and footwear. Earlier this summer, the company acquired the Champion footwear trademark for the U.S. and Canada from the Keds unit of Wolverine Worldwide for $90 million cash. Hanesbrands hopes to use the purchase in its globalization strategy for the Champion brand, including brand expansion into new geographies. Champion is said to already have a “robust footwear business” in Europe and Asia. “This purchase adds to the control we have over the Champion brand,” Bratspies said, adding, “it will give us greater speed to market and the ability to have a more integrated and collaborative approach with our apparel offerings.”
On the logistics and supply chain side of Champion’s operations, the group is consolidating down to two Champion distribution centers in the U.S. to create efficiencies, lower costs and improve retail service in the market.
Hanesbrands forecasts better results for its innerwear and activewear segments in Q3 than in Q4 due to initial back-to-school commitments and initial shipments of Champion fall/winter product ranges.
