Covid-19 pushes HanesBrands into first-quarter loss
HanesBrands, Inc., the Winston-Salem, North Carolina-based owner of brands including Hanes and Champion reported a Q1 loss on Thursday, as a stronger than expected performance early in the quarter was undermined by the escalation of the coronavirus pandemic.
For the first quarter ended March 28, 2020, the company announced a net loss of $7.8 million, or $0.02 per diluted share, down from earnings of $81.1 million, or $0.22 per diluted share, in the prior-year period.
The group’s quarterly net sales totaled $1.32 billion, representing a 17.1% decline compared to the $1.59 billion reported by the company in the same period in the previous year. Along with the negative impact of the ongoing global health crisis, sales were also affected by HanesBrands’ exit from its C9 Champion mass program and DKNY intimate apparel license, which together represented around $94 million in revenue in Q1 2019.
Sales fell 14% in the company’s international segment, 11% in its U.S. innerwear segment and 29% in U.S. activewear. Before mid-March, the innerwear and activewear segments were performing better than expected, but both have since suffered a significant negative impact due to the Covid-19 pandemic.
HanesBrands’ international segment was impacted both by wholesale declines and the temporary closure of its brand stores, approximately 1,000 of which (out of a total 1,200) are located in international geographies.
The company was nonetheless eager to highlight sales generated by channels that have remained open during the health crisis, such as its online, mass retail, dollar store, and food and drug channels. Total online sales increased 5% at HanesBrands in the first quarter.
“The Covid-19 pandemic is proving to be a significant challenge for every aspect of society to navigate,” commented HanesBrands CEO Gerald W. Evans Jr. in a release. “As a 120-year-old business enterprise, we feel confident that we have the right plans, the consumer-trusted brands and products, and a superior workforce to not only overcome these short-term business challenges but to thrive over the long term.”
In order to navigate the challenges presented by the ongoing health crisis, HanesBrands has reduced discretionary spending and capital expenditures, cut salaries and furloughed specific employee groups, as well as managing its inventory and supply chain production. These measures are expected to result in a $200 million saving in 2020.
The company also intends to secure around $500 million in debt financing.
Due to the continued uncertainty caused by the coronavirus pandemic, HanesBrands has not any provide financial guidance.
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