On its first-quarter analyst call, Steve Bratspies, CEO of Hanesbrands Inc., attributed the Champion’s 22 percent tumble in the U.S. in the period on promotional pressures in an over-inventoried marketplace.

“The POS (point-of-sale) in the channels has been soft, and that tracks with inventory in general, and that’s really just driven by the broader consumer environment,” said Bratspies. “So, it’s a very competitive space.”

He also noted that “there are a lot of big players” promoting across retail, referencing moves to aggressively work down inventory by Nike, Adidas and others in the athletic apparel space.

“When you get an inventory backup of the scale that we have, people try to move it and try to move it aggressively,” said Bratspies. “But it’s really not unexpected when you get into this kind of situation, so I wouldn’t say there’s anything necessarily abnormally playing out based on the current situation of a slow consumer with a lot of inventory. So, we have to manage through that.”

Champion’s decline also reflected strategic channel clean-up actions in the U.S.

Champion’s global sales decreased 17 percent on a reported basis in the quarter with a 22 percent decline in the U.S. and a 12 percent decline internationally. On a constant-currency basis, global Champion brand sales decreased 15 percent with a 7 percent decline internationally.

Overall, Bratspies said he remains bullish on Champion’s growth and long-term potential.

“There’s just a tremendous amount of growth potential out there, and obviously we have our Full Potential growth plan, but we’ve got a new team in place, and the work that they’re doing really builds the foundation of this business, both on the top line and on margin, well beyond what we’re trying to do in the Full Potential,” Bratspies told analysts. “So, we’re doing a lot of work on a global basis to coordinate our offering, simplify the business, create a lot more speed, enter and grow different categories globally like footwear.”

He added, “So while the business overall and the categories overall are struggling, we’re moving forward very aggressively, and I’m very confident that we have a clear path to long-term growth for this business. 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 this brand.”

Overall, sales in the Activewear segment, which consists of U.S. activewear sales, declined 18.6 percent to $18.6 million. Operating profits in the segment tumbled 79.6 percent to $9.97 million.

Bratspies said Champion’s decline in the U.S. was consistent with its outlook while the sales decline in HanesBrands other activewear brands was worse than expected. HanesBrands also makes activewear under Hanes, Gear for Sports, Comfortwash, Alternative, JMS/Just My Size and Hanes Beefy-T.

“The activewear decline was driven by the slowdown in consumer spending which resulted in lower point of sale and higher inventory levels at retail, as well as the strategic channel cleanup work we’re doing within the Champion in the U.S.,” said Bratspies. “On the positive side, we experienced another quarter of year-over-year growth in our collegiate business.”

Internationally, sales on a currency-neutral basis for Champion in the quarter increased in Europe, Japan, the Americas, and Australia, but those gains were offset by a decline in China as re-orders and sell-in shipments were impacted by higher retail channel inventory that resulted from COVID-related closures in prior periods. Bratspies added, “We expect shipment growth to improve in China as point-of-sale or sell-through in the first quarter was up low double digits over last year. In addition to China’s reopening, we experienced constant currency growth in Europe, Australia, Japan, and the Americas in the quarter. So overall, our Champion international business remains healthy.”

Internationally, Champion overall is faring better, according to Bratspies.

“International business is doing well, and we run those businesses historically a little bit differently,” said Bratspies on Champion. “We’re more disciplined in terms of channel and product segmentation around the globe than we’ve been domestically.  So, I feel good about where we’re headed in this business.”

He concluded, “We do need to work through the near-term inventory issues and the near-term promotional environment to get back to a more steady base with the consumer. But I think we’re going to be really well-positioned on the other side of this to come out really strong as the market settles.”

Photo courtesy Champion