Hanesbrands, Inc. reported that Activewear segment sales decreased 24.1 percent year-over-year to $285.8 million in the fourth quarter, with decreases reported across all channels and brands, driven by the ongoing combination of challenging activewear apparel market dynamics, including soft consumer demand and cautious ordering from retailers, and the expected top-line headwinds from the strategic actions the company has taken to strengthen the brand and position Champion for long-term profitable growth. These actions include disciplined product and channel segmentation, shifting its mix and assortment changes.

Segment operating profit (loss) was a loss of $11.2 million in the fourth quarter, compared to operating profit of $28.4 million in the prior-year corresponding period.

Operating margin for the segment was negative 3.9 percent for the period, decreasing approximately 1,145 basis points compared to fourth quarter 2022. The year-over-year decrease was driven predominantly by lower sales volume, the lingering impact from higher input costs due to slower inventory turns, and unfavorable business mix, which more than offset disciplined SG&A expense management.

Global Champion brand sales decreased 23 percent on a reported basis and 24 percent on a constant-currency basis in the fourth quarter, as compared to the prior-year quarter.

  • U.S. sales decreased 30 percent, driven by the combination of challenging activewear apparel market dynamics and the expected top-line headwinds from the strategic actions the company is taking to strengthen the brand and position Champion for long-term profitable growth. These actions include disciplined product and channel segmentation, shifting its mix, and assortment changes.
  • Internationally, sales decreased 14 percent on a reported basis and 15 percent on a constant-currency basis. Constant-currency sales increased in China and Latin America, more than offset by decreases in Europe, Japan, and Canada.

Activewear segment sales for the full year amounted to $1.25 billion, a 19.5 percent decrease from the full-year 2022 period. Segment operating profit was $20.5 million in 2023, compared to $153.7 million in 2022. Operating margin for the segment was 1.6 percent of sales for the year, decreasing 825 basis points from the 9.9 percent operating margin in full-year 2022.

Hanesbrands took restructuring and other action-related charges in the gross profit line equal to $2.9 million for the fourth quarter and $67.0 million for the full year related to the Global Champion performance plan. The restructuring and other action-related charges in the SG&A line were $11.5 million in Q4 and $21.1 million for the year. The overall impact on operating profit was $14.3 million in the fourth quarter and $88.0 million for the full year. 

From an earnings-per-share standpoint, the Global Champion performance plan impacted diluted EPS by 4 cents per share in the fourth quarter and 25 per share for the full year.

Image courtesy Champion