In the third quarter, HanesBrands navigated a 9.5% decline in sales, totaling $1.51 billion, with the spotlight on the struggles of its Champion brand, witnessing a significant 19% drop compared to the same period last year.
While Latin America and Japan experienced growth, and U.S. innerwear performed consistently, challenges emerged from a decrease in U.S. activewear and macroeconomic-driven consumer spending slowdown impacting Australia. Additionally, Europe and parts of Asia faced declines, presenting a comprehensive sales challenge.
Global Champion brand sales faced a 16% decline in the U.S., primarily attributed to ongoing challenges in the activewear market. Internationally, sales plummeted by 22%, driven by cautious ordering in Europe and macroeconomic headwinds affecting demand in parts of Asia and Australia.
From a financial perspective, the loss from continuing operations amounted to approximately $39 million, or $0.11 per diluted share, marking a substantial shift from the income reported in the same period last year.
Steve Bratspies, CEO of HanesBrands, acknowledged the challenging global macroeconomic environment. The company has proactively initiated an evaluation of strategic alternatives for its global Champion business, including a potential sale, as announced in September.
Bratspies highlighted ongoing efforts to improve core fundamentals. Despite sales pressure, the company has showcased meaningful improvements in key performance metrics. Adjusted margins are on an upward trajectory as input cost inflation eases, and the benefits of cost savings and efficiency initiatives become evident. Notably, the company is actively reducing inventory, generating operating cash flow in line with historical levels, and adhering to planned debt reduction.
As we anticipate further improvement in key performance metrics in the fourth quarter, HanesBrands remains resilient amidst market challenges, strategically positioning itself for future growth and success.
