HanesBrands, a US-based company, reported a significant decline of 14% in net sales from continuing operations in the second quarter of fiscal 2022. This drop in sales was primarily attributed to two factors: the impact of a ransomware attack and weaker-than-expected point-of-sale trends. However, if we exclude sales of personal protective equipment (PPE), net sales actually increased by an impressive 75% when compared to the sales from two years ago.

The company’s subsidiary, Global Champion brand, also saw a decline in sales. In constant currency, the brand experienced a 20% decrease compared to the previous year, or a 23% decline on a reported basis. This decline was observed both in the US and internationally. However, when we consider a two-year period, constant-currency sales of the Champion brand actually increased by 96% globally.

In terms of gross profit, HanesBrands reported $572 million for the second quarter, marking a decrease of 16% compared to the previous year. The gross margin also decreased from 38.9% to 37.8%. When we look at adjusted gross profit, which excludes certain costs related to the company’s full potential plan, we see a decline from $684 million to $573 million compared to the previous year. Adjusted gross margin also declined by approximately 120 basis points. This decline can be attributed to lower sales volume, input cost inflation, costs associated with the cyber attack, and foreign currency exchange rates. These factors outweighed the benefits from a favorable business mix, a price increase in the Innerwear business, cost savings, and reduced air freight.

While HanesBrands CEO, Steve Bratspies, expressed disappointment in the company’s second-quarter results, he remained optimistic about the progress they have made on their full potential plan. Bratspies emphasized the company’s strategic supply chain initiatives, a robust innovation pipeline, and continued investment in global brands. He also took the opportunity to express gratitude to the company’s associates worldwide for their dedication to serving customers and consumers.

Looking ahead, HanesBrands has adjusted its outlook for the second half of the year. Due to changes in foreign currency exchange rates, short-term costs related to inventory reduction, and an assumption of slow consumer demand and a challenging retail environment, the company expects net sales and profit to be affected. In the third quarter of 2022, HanesBrands anticipates net sales from continuing operations to range from approximately $1.73 billion to $1.78 billion. This includes an estimated headwind of $58 million from foreign currency exchange rates. Overall, this represents a 1% growth on a constant currency basis or a 2% decline on a reported basis compared to the previous year.

Useful links:
1. HanesBrands Official Website
2. HanesBrands Investor Relations