Reporting its Q1 financial results for first quarter 2022, HanesBrands announced that it had exceeded its guidance for sales, operating profit, operating margin and earnings per share despite the challenging global market. The Winston-Salem, North Carolina-headquartered company attributes the better-than-expected performance to continued strong consumer demand for its brands and increased selling, general and administrative expenses (SG&A) efficiency as it benefits from its Full Potential initiative, a three-year growth plan designed to drive approximately $1.2 billion in incremental revenue and expand operating margins to 14.3% by 2024.

HanesBrands participates in the promotional products industry as suppliers Hanes/Champion/ComfortWash (PPAI 191138, S10) and Alternative Apparel (PPAI 217134, S5).

The Details: Highlights of HanesBrands’ Q1 financial report include:

  • HanesBrands reported net sales from continuing operations of $1.58 billion in first quarter 2022, an increase of 5% over 2021’s first quarter. Excluding the $30 million impact from foreign exchange rates, net sales increased 7%.
  • The company’s gross profits for the quarter of $584 million were down 3% compared to the prior year. Gross margin was 37.1%, down from 40% in the prior year. Adjusted Gross Profit, which excludes certain costs related to the Full Potential plan, was $585 million compared to $605 million last year.
  • HanesBrands attributes the margin decline to the expected impact from higher inflation and the higher-than-planned strategic investment in expedited freight to service new retail space gains and new product innovation. These headwinds more than offset efficiency improvements in manufacturing, cost savings from initiatives such as its SKU reduction program and the partial-quarter benefit from the price increase in its Innerwear business.
  • Global Champion brand sales increase 6% over prior year in constant currency—exchange rates used to eliminate the effect of fluctuations when calculating financial performance numbers. Revenue growth accelerated on a two-year basis for the brand as well, measured both domestically and internationally, as well as for each of its business segments; Innerwear, Activewear and International. Sales in all segments as well as for the global Champion brand remain above pre-pandemic levels.
  • U.S. Innerwear sales increased 1.5% over the prior year, exceeding the company’s outlook for the segment in first quarter. Growth was driven by retail space gains, higher prices and a positive product mix.
  • HanesBrands also attributes its Full Potential plan for a robust product and innovation pipeline developed in both its Innerwear and Champion businesses. It notes that innovation and design are moving at a faster pace and the product pipeline is the broadest it has been in decades, positioning the company for continued growth in 2023, 2024 and beyond.

What They Had To Say: In remarks released with the Q1 financial report, HanesBrands CEO Steve Bratspies says, “I’m very proud of our team for delivering another strong quarter in an incredibly challenging time as we exceeded expectations for sales and earnings per share. We saw continued strong demand for our brands in the quarter, with global Champion and innerwear growth accelerating on a two-year basis.

“At the same time, the global operating environment has deteriorated significantly over the past three months, with accelerating inflation, continued COVID-19 disruptions and logistical challenges. In this environment, we are highly focused on executing in the areas we control. We are unwavering in our commitment to investing in our people, brands and technology, and I remain confident that we will deliver on our Full Potential plan.”