Hanes Innerwear Profit Leaps 151%

Hanes Innerwear segment operating profit surged dramatically for the fourth quarter and full year (150.5% and 7.6% respectively), while net sales remained essentially flat, indicating growing strength in the U.S. underwear market, and providing most of the best news for the parent company.

Company wide, Hanesbrands, which sells a variety of apparel across several divisions, lost $17.7 million on total sales of $5.6 billion for the year.

Meanwhile, the Innerwear segment reported an operating profit of $418.2 million on net sales of $2.42 billion for the 12 months ended December 30, 2023, compared to an operating profit of $388.6 million on net sales of $2.43 billion the year before. In the four quarter, Innerwear operating profit soared to $112.7 million on sales of $533.6 million, compared operating profit of $44.0 million on sales of $540.2 million in the same quarter the year before.

Hanes explained that “gross margin returned to pre-inflation levels, as expected,” noting that compared to prior year fourth quarter “gross margin of 38.1% increased 400 basis points,” which reflected “the expected benefits from the company’s inventory and cost savings initiatives as well as lower input costs from commodities and ocean freight.”

Hanes also explained that in the fourth quarter its “U.S. Innerwear business gained market share with both men and women. The strongest share gains in the quarter were with younger consumers. Market share gains were driven by key consumer-led innovations, including Hanes Originals and M by Maidenform, permanent retail space gains, increased brand marketing investments, as well as improved on-shelf product availability. Revenue from new product innovation was up 60% over prior year in the fourth quarter and up more than 40% for full-year 2023. For 2024, the company has a robust pipeline of innovation launches spanning its global brand portfolio, including new products within Hanes and Bali in the U.S.”

CEO Steve Bratspies declared for the company overall, “Our fourth quarter performance did not meet our expectations as the sales environment proved to be more challenging than expected. However, we saw several positive indicators that give us confidence margins and leverage have reached a positive inflection point and demonstrate progress on our strategy to simplify our business, reduce inventory, cut costs, and reignite Innerwear.”

He added, “Importantly, we exceeded our year-end goals in all four key 2023 performance metrics, including gross margin, inventory, operating cash flow and debt reduction. During the quarter, new products and permanent retail space gains drove increased market share in U.S. Innerwear, which we expect to build upon as we rollout another record year of innovation and increase our brand marketing investments. For 2024, we believe we’re well positioned for continued margin improvement, another year of strong cash generation and continued debt reduction.” — NM