Hanes, Champion Brands Slump as Retailers Don’t Replenish Inventory

Champion clothing

HanesBrands says retailers’ decisions to reduce inventories has led to a slump in sales.

The apparel maker reported quarterly earnings Thursday (Feb. 2) showing that innerwear sales had fallen 19% compared to the year before.

“The year-over-year sales performance was driven by macroeconomic pressures that weighed on consumer spending as well as the continued impact to replenishment orders from retailers’ decisions to reduce broader inventory positions,” the company said in a news release.

Meanwhile, the company’s activewear sales dropped 16%, driven by “lower point-of-sale trends and higher activewear inventory levels at retail.” Drilling down, sales of the company’s Champion brand fell 21% while other brands in the Hanes activewear segment dropped 8%.

The company’s stock — down 54% in the last year — fell 20% in early trading following the news. Hanes says it will also push its $8 billion net sales target — originally aimed at 2024 — back to the end of 2026.

During an earnings call Thursday, HanesBrands CEO Steve Bratspies was asked when he thought the inventory situation might improve.

Inventory levels vary by the business, he responded, noting that in activewear, there are “still pockets” where inventories remain high.

“It’s a bit of a hit and miss,” Bratspies said, adding that the company was taking a “conservative view” in its approach to 2023.

“We’re seeing a muted view of the consumer this year,” Bratspies said.

Consumers are also taking a more conservative view of spending, as recent PYMNTS research has shown.

As the year gets underway, inflation and economic uncertainty are still major concerns for most U.S. consumers, with increasing prices for everything from groceries to fuel dampening consumers’ spending power over the last year.

“Growing shares of U.S. consumers at all income levels now spend most of their monthly income on expenses, finding it harder to put aside money for savings,” PYMNTS wrote earlier this week. “At the end of 2022, 9.3 million more U.S. consumers were living paycheck to paycheck than the year before, with 8 million of these consumers earning more than $100,000 per year.”

Still, Bratspies said he was confident in the company’s “Full Potential” strategy, which involves consumer-centricity, simplification, increased speed and digital capabilities.

HanesBrands stepped up that strategy last year, following a ransomware attack that crippled the company’s supply chain, costing it $100 million in sales.

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