For the fourth quarter, HanesBrands Inc. reported a 16 percent decline in net sales to $1.47 billion, which included a $55 million unfavorable impact from foreign exchange rates, compared to last year.
On a constant currency basis, net sales were down 13%. The currency’s continued decline, the company said in a statement, was due to a macroeconomic slowdown in consumer spending in the US and some international markets, combined with the continued impact on US orders from retailers’ decisions to reduce broader inventory positions.
HanesBrands continues to expect to achieve its long-term financial goals of approximately $8 billion in net sales and an operating margin of approximately 14.4 percent. The company now expects to achieve these goals by the end of 2026.
“We delivered fourth quarter results at or above our guidance as we continue to take actions to navigate the extremely challenging environment,” said Steve Bratspies, the company’s CEO.
Highlights of HanesBrands’ Q4 performance
The company added that sales of the Global Champion brand fell 18 percent on a reported basis compared to the prior year, with a 21 percent decline in the U.S. and a 13 percent decline internationally. In constant currency, global brand sales fell 14 percent, with a 3 percent decline internationally.
Compared to the previous year, fixed coin sales increased in Asia and Australia. This growth was largely offset by soft consumer demand and retailer inventory actions in the US, as well as declines in Europe.
Gross profit of $502 million was down 25 percent from a year earlier. Gross margin was 34.1%, up from 38.1% a year ago, while adjusted gross profit was $505 million and adjusted gross margin of 34.3% was down about 415 basis points compared to the prior year.
Operating profit and operating margin in the fourth quarter were $60 million and 4.1 percent, respectively, compared to $156 million and 8.9 percent, respectively, a year ago. Adjusted operating profit of $83 million was down from $220 million in the fourth quarter of 2021, and adjusted operating margin of 5.6 percent was down about 695 basis points from a year earlier.
Losses from continuing operations were $418 million, or $1.19 loss per diluted share, compared with income from operations of $68 million, or 19 cents per diluted share, last year. Adjusted income from continuing operations was $24 million, or 7 cents per diluted share, compared to adjusted income of $156 million, or 44 cents per diluted share, in the fourth quarter of 2021.
Fourth Quarter Business Segment Results Within HanesBrands
The company also reported that sales of innerwear fell 19% compared to last year due to macroeconomic pressures affecting consumer spending as well as the continued impact on replenishment orders from retailers’ decisions to reduce broader inventory positions. These pressures more than offset the benefits of rising prices in the first quarter of 2022 and retail space gains.
Activewear sales were down 16 percent compared to last year as continued growth in the collegiate channel for both the Champion and Hanes brands was offset by declines in other channels due to lower point-of-sale trends and higher Activewear retail inventory levels. By brand, Champion sales in the Activewear reporting segment fell 21%, while sales of other Activewear brands fell 8%.
International sales fell 12 percent on a reported basis, including $55 million from unfavorable foreign exchange rates. International sales fell 2 percent on a constant currency basis, as growth in Asia was offset by declines in Australia, the Americas, Europe and Canada.
HanesBrands Full Year Results Review
For the full year, net sales fell 8 percent to $6.23 billion, which includes a $182 million unfavorable impact from foreign exchange rates, while on a constant currency basis, net sales fell nearly 6 percent.
Gross profit of $2.22 billion was down 16.2%, while gross margin was 35.6%, down from 39% a year earlier. Adjusted gross profit was $2.24 billion and adjusted gross margin was 35.9%, down approximately 320 basis points compared to the prior year.
The loss was $131 million, or 37 cents per diluted share, compared with income from continuing operations of $521 million, or $1.48 per diluted share, last year. Adjusted income was $342 million, or 98 cents per diluted share, compared with adjusted income of $645 million, or $1.83 per diluted share, in the full year 2021.
HanesBrands expects a marginal decline in FY23 net sales
For fiscal 2023, the company currently expects net sales of approximately $6.05 billion to $6.20 billion. At the interim point, this represents an approximate 1 percent decrease compared to the prior year on a constant currency basis and a 2 percent decrease on a benchmark basis. GAAP operating earnings from continuing operations are expected to range from approximately $446 million to $496 million, while adjusted operating earnings are expected to range from approximately $500 million to $550 million.
GAAP earnings per share from continuing operations are expected to range from approximately 14 cents to 25 cents and adjusted earnings per share to range from approximately 31 cents to 42 cents.
For the first quarter of 2023, the company currently expects net sales from continuing operations of approximately $1.35 billion to $1.40 billion. At the interim point, this represents an approximate 11 percent decrease compared to the prior year on a constant currency basis and a 13 percent decrease on a benchmark basis.
GAAP operating earnings are expected to range from approximately $39 million to $59 million and adjusted operating earnings from approximately $50 million to $70 million.
GAAP loss per share is expected to range from approximately 14 cents to 9 cents, and adjusted loss per share is expected to range from approximately 9 cents to 4 cents.