The global Champion brand, a key segment for HanesBrands, suffered a substantial downturn. Sales plummeted by 19 per cent on a reported basis and an even steeper 20 per cent on a constant currency basis compared to the previous year. In the US, sales dropped by 16 per cent, a consequence of the ongoing challenges in the activewear market. Internationally, the decline was sharper, with sales diminishing by 22 per cent on a reported basis and 24 per cent on a constant currency basis.

HanesBrands’ gross profit for the quarter stood at $470 million, a 16 per cent decrease, while the gross margin contracted by 260 basis points to 31.1 per cent. However, when adjusted for certain costs relating to the company's full potential transformation plan and its global Champion performance plan, the adjusted gross profit was somewhat higher at $536 million, resulting in an improved adjusted gross margin of 35.5 per cent, up 100 basis points from Q3 FY22, the company said in a press release.

The company's selling, general and administrative expenses saw a 4 per cent reduction, amounting to $404 million. Operating profit and margin in Q3 FY23 were reported at $66 million and 4.4 per cent, respectively, a significant decrease from $141 million and 8.5 per cent in the previous year. The adjusted operating profit stood at $143 million, down from $168 million in Q3 FY22, with the adjusted operating margin decreasing by approximately 60 basis points.

Continuing operations incurred a loss of approximately $39 million, or $0.11 per diluted share. In contrast, the same period last year witnessed income from continuing operations of $80 million, or $0.23 per diluted share. Adjusted income from continuing operations amounted to $34 million, or $0.10 per diluted share, a decrease from $102 million, or $0.29 per diluted share, in Q3 FY22.

Innerwear sales remained stable, aligning with the company's projections and achieving market share gains despite a marginal decline in the market. However, activewear sales decreased by 17 per cent, affected by reduced consumer demand and excess inventory in the channel. International sales reported a 12 per cent decline, including a $4 million impact from unfavourable foreign exchange rates. The company's inventory at the end of Q3 FY23 was $1.52 billion, showing a 17 per cent sequential decrease and a significant 29 per cent, or $620 million, year-over-year reduction.

“We’ve continued to drive improvement in core fundamentals while simultaneously assessing our business and options to unlock shareholder value,” said Steve Bratspies, CEO. “Despite the difficult global macroeconomic environment, which continues to pressure sales, we delivered meaningful improvement across key performance metrics and initiated an evaluation of strategic alternatives for our global Champion business. Our innerwear innovation is hitting the market and we’re gaining market share.”

Fibre2Fashion News Desk (DP)