Hanesbrands, the Champion parent, is excited about the long-term outlook for the activewear brand despite current brand challenges in the U.S. and China. Besides facing lower sell-in shipments in China in Q1, Champion’s business was negatively impacted in its home U.S. market by a slowdown in consumer spending and high overall apparel inventory levels at retail. The company is currently addressing those issues with a “strategic channel cleanup” in the market.
“…We’re moving forward very aggressively, and I’m very confident that we have a clear path to long-term growth for this business, CEO Steve Bratspies told analysts. “There’s certainly disruption short-term, particularly in the U.S., and we have a lot of work to do in the U.S., but I remain confident in the brand. The international business is doing well, but we run those businesses historically a little bit differently. We’re more disciplined in terms of channel and product segmentation around the globe.”
In Q1 ended April 1, Hanesbrands lost $34.4 million against a profit of $118.7 million in the year-ago period, as total revenues fell 11.8 percent to $1.39 billion from $1.58 billion. Operating profit sunk by 66 percent to $57.3 million, and gross margin declined 470 basis points due to headwinds from lower sales volume, unfavorable product mix, higher labor costs, and higher-cost inventory.
Global Champion sales fell by 17 percent on a reported basis year-over-year. Brand sales outside the U.S. declined by 12 percent and fell 22 percent in the U.S. Constant-currency sales rose in Europe, Japan, the Americas, and Australia. Sell-through demand in China increased at a low double-digit rate, the company reported.
Within the broader activewear segment, period sales declined by 19 percent to $314.9 million, fueled by a slowdown in consumer spending. Champion brand sales within the segment also fell by 19 percent. The activewear segment operating segment slipped by nearly 80 percent to $10.0 million from $49.0 million.
Hanesbrands, which reported Q1 results within its guidance, is maintaining its FY23 outlook that calls for revenues of $6.05 to $6.20 billion, including a $40 million headwind from currency exchange impact and an adjusted operating profit from continuing operations range of $500 to $550 million.
