The US clothing group Hanesbrands Inc. announced its results for the second quarter of 2022 on Thursday. These fell short of the company’s expectations, which it attributed to weaker-than-expected point-of-sale trends and the ransomware attack in May, which temporarily affected supply chain and orders and cost the company $100 million.
For the three months ended July 2, sales from continuing operations — excluding portions of the sold European lingerie business and now-discontinued operations — were $1.51 billion, down $238 million from a year earlier or 14 percent. Excluding the unfavorable foreign exchange impact of $38 million, net sales decreased 11 percent on a constant currency basis. Viewed by division, sales of lingerie fell by 12 percent and activewear by 18 percent.
Gross profit of $572 million decreased 16 percent year over year. Gross margin was 37.8 percent, compared to 38.9 percent a year earlier. Adjusted gross profit, which excludes certain charges related to the company’s Full Potential Plan, was $573 million compared to $684 million in the prior year.
The margin decline was caused by the impact of lower sales volume, input cost inflation, the additional costs related to the cyber incident and foreign exchange rates. However, it was more than offset by business mix benefits, first-quarter innerwear pricing, cost savings and reduced air freight, the company said.
“Our second quarter results fell short of our expectations due to unexpected events and the difficult global business environment. Despite the challenges, we continue to make progress on our Full Potential Plan. We are in the early stages of our strategic supply chain initiatives. Our innovation pipeline is the strongest it has been in years and we continue to invest in building our global brands. I would like to thank our employees around the world for their continued commitment to serving our consumers and customers,” said Hanesbrands CEO Steve Bratspies in the interim report.
Hanesbrands with more cautious sales and profit guidance
The company has accordingly revised its sales and earnings guidance for the second half of the year more cautiously to reflect the shift in foreign exchange rates, near-term costs related to de-stocking efforts through year-end and the assumption that weak consumer demand will persist and the retail environment will remain challenging. to take into account.
It therefore expects net sales from continuing operations to be approximately $1.73 billion to $1.78 billion for the third quarter, or $6.45 billion to $6.55 billion, including anticipated headwinds of approximately $165 million US Dollars, due to changes in exchange rates, for the year ended December 31, 2022.
Hanesbrands relies on a “robust pipeline of new products and innovations that extends beyond 2023”. In addition, the launch of new lingerie items and innovations such as Hanes Total Support Pouch with X-Temp and Hanes Retro Rib brought a positive response from consumers and retailers as well as additional retail space gains.
The company also acquired the Champion footwear brand in North America, giving it greater control over the brand and its products. In addition, through stronger global coordination of design, product development and merchandising, Hanesbrands will be able to offer a head-to-toe offer in all regions. The company has also continued to simplify its Champion US distribution network to drive efficiencies and cost savings, improve service to its retail partners, and support future growth.
In addition, Hanesbrands is in the process of executing its Full Potential Supply Chain strategies to expand its “advantageous position and strike a balance between speed, cost and flexibility that enables faster revenue growth and higher margins”.
In addition to those already mentioned, these efforts include supply chain segmentation, direct shipping of innerwear products from Central American manufacturing facilities to designated wholesale customers, and a new West Coast distribution center expected to open later this month to support D2C business. In addition, several distribution centers are to be automated in order to increase the compilation and sorting speed while reducing costs at the same time.