Champion owner HanesBrands Q2 sales drop

HanesBrands, owner of the Champion brand, has released its financial results for the second quarter, revealing a 14% decrease in net sales to £1.24 billion ($1.51 billion).

The group's "lower-than-expected" sales performance was driven by the impact from the previously announced ransomware attack, as well as softer-than-expected point-of-sale trends.

Global Champion brand sales decreased 23% in constant currency, with similar declines in both the US and internationally. On a two-year stack basis, Champion brand sales increased 96% globally.

The group's activewear sales declined 18% compared to the year prior, with Champion activewear sales down 25%.

International sales decreased 3% on a constant currency basis. Sales declined at a low-single digit rate in Europe and Australia, which offset growth in the Americas.

Gross profit declined 16% to £472 million ($572 million), with gross margin down 38.9% to 37.8%. This margin decline was driven by impact from lower sales volume, input cost inflation, costs associated with the cyber event and foreign currency exchange rates.

Income from continuing operations totalled £76 million ($93 million), compared to £122 million ($148 million) last year.

HanesBrands has now provided an update to its third quarter and full year guidance, taking a more "prudent" view of its second-half net sales and profit outlook to reflect changes in foreign currency exchange rates, short-term costs associated with actions to reduce inventory by year-end and an assumption that slow consumer demand continues and the retail environment remains challenging.

For Q3 2022, the group expects net sales of approximately £1.42 billion ($1.73 billion) to £1.47 billion ($1.78 billion), which includes a projected headwind of approximately £47 million ($58 million) from changes in foreign currency exchange rates.

For FY22, the group expects net sales of approximately £5.32 billion ($6.45 billion) to £5.41 billion ($6.55 billion), which includes a projected headwind of approximately £136 million ($165 million) from changes in foreign currency exchange rates.

Steve Bratspies, CEO of HanesBrand, said: “Our second quarter results fell below our expectations as a result of unexpected events and the difficult global operating 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 more robust than it has been in years, and we continue to invest in building our global brands. I want to thank our associates around the globe for their ongoing commitment to serving our consumers and customers.”