HanesBrands Navigates Headwinds With Focused Strategy Shift Toward Innerwear Growth

$HBI

As legacy apparel giant HanesBrands wrapped its fiscal year, the company faced continued revenue pressure—most notably within its activewear division. For the fourth quarter of 2023, the company posted $1.3 billion in net sales, marking a 12% year-over-year decline. The downturn was especially pronounced in the activewear segment, which saw sales drop 24%, a consequence of broader market softness, tepid consumer demand, and conservative buying from retail partners.

Among the brands most impacted was Champion, which fell 23% for the quarter. That performance added urgency to HanesBrands’ ongoing assessment of the Champion business. The company previously entered a licensing agreement with G-III Apparel Group in late 2023 and has continued to explore options ranging from operational restructuring to a possible divestiture. While Champion remains a recognizable name, HanesBrands is signaling a strategic pivot—one that puts innerwear at the center of its turnaround story.

CEO Steve Bratspies acknowledged the shortfall in quarterly expectations, citing a sales environment that proved more volatile than initially projected. Still, he struck an optimistic tone on fundamentals. The company met or exceeded internal targets on several fronts: gross margin improvements, operating cash flow, and debt reduction. Perhaps most notably, HanesBrands ended the year with inventory levels under $1.4 billion—a 31% year-over-year improvement—thanks to a focused approach on SKU rationalization and lifecycle management.

A key component of that simplification has been a sharpened emphasis on the innerwear segment. Although Q4 sales in this category dipped slightly—down 1%—the company managed to grow market share among both men and women. HanesBrands noted particularly strong engagement from younger consumers, driven in part by innovation-led lines like M by Maidenform and Hanes Originals. New product introductions and expanded shelf space at retail helped lift brand visibility in a contracting market, which the company says shrank 5% overall in the quarter.

HanesBrands plans to deepen investments in marketing and product innovation across its innerwear lines. The goal is to leverage gains made in 2023 into a broader resurgence in 2024. Bratspies expressed confidence that the strategic repositioning will translate into improved margins, healthier cash flow, and continued progress on debt reduction.

For the full fiscal year, HanesBrands reported net sales of $5.6 billion, representing a 9.6% decline from 2022. Innerwear was down only slightly, by 0.6%, while activewear fell nearly 20%. International sales contracted 8.7% during the year.
Outside of its core financials, the company also announced workforce adjustments that reflect ongoing restructuring. Approximately 160 employees will be laid off at a Winston-Salem, North Carolina distribution center in early April, as the facility undergoes a transition. Specifics around that repurposing were not detailed in the company’s earnings.

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