Hanesbrands (HBI) Q2 2022 Earnings Results

By Amit Chowdhry ● Aug 11, 2022
  • Hanesbrands (HBI) has announced its Q2 2022 earnings results. These are the details.

Hanesbrands (HBI) has announced its Q2 2022 earnings results. Below are the highlights.

Q2 2022 Results

1.) Net sales from continuing operations of $1.51 billion decreased $238 million, or 14%, over the prior year. The lower-than-expected sales performance was driven by the impact from the previously announced ransomware attack (also referred to in this release as “cyber event”) as well as softer-than-expected point-of-sale trends. Adjusting for the $38 million unfavorable impact from foreign exchange rates, net sales decreased 11% on a constant currency basis.

a.) Net sales, excluding PPE, increased 75% on a two-year stack basis.

b.) Global Champion brand sales decreased 20% over the prior year in constant currency, or 23% on a reported basis with similar declines in both the U.S. and internationally. On a two-year stack basis, constant-currency Champion brand sales increased 96% globally.

2.) Gross Profit of $572 million declined 16% as compared to prior year. Gross margin was 37.8%, down from 38.9% in the prior year. Adjusted Gross Profit, which excludes certain costs related to the Company’s Full Potential plan, was $573 million compared to $684 million last year. Adjusted Gross Margin of 37.8% declined approximately 120 basis points compared to the prior year. The margin decline was driven by impact from lower sales volume, input cost inflation, the incremental costs associated with the cyber event and foreign currency exchange rates. These headwinds more than offset the benefits from business mix, the first-quarter price increase in its Innerwear business, cost savings, and less air freight.

3.) Selling, General, and Administrative (SG&A) expenses were $425 million as compared to $464 million in the second quarter last year. Adjusted SG&A expenses, which exclude certain costs related to its Full Potential plan, were $419 million compared to $447 million last year. As a percent of net sales, adjusted SG&A expense of 27.7% increased approximately 215 basis points compared to the prior year. The year-over-year deleverage in SG&A was driven by lower sales volume and planned increased investments in brand marketing and technology, which more than offset cost controls and expense efficiencies from Full Potential initiatives in the quarter.

4.) Operating Profit and Operating Margin in the second quarter of 2022 were $147 million and 9.7%, respectively, which compared to $217 million and 12.4%, respectively, in the prior year. Adjusted Operating Profit of $154 million declined by $82 million as compared to the second quarter of 2021. The adjusted Operating Margin of 10.2% declined approximately 335 basis points over the prior year.

5.) The GAAP and Adjusted Effective Tax Rates for second-quarter 2022 were both 17.0%. For the second quarter of 2021, GAAP and adjusted effective tax rates were 14.6% and 14.2%, respectively.

6.) Income from continuing operations totaled $93 million, or $0.26 per diluted share. This compares to income from continuing operations of $148 million, or $0.42 per diluted share, last year. Adjusted income from continuing operations totaled $98 million, or $0.28 per diluted share. This compares to adjusted income from continuing operations of $165 million, or $0.47 per diluted share, in second-quarter 2021.

KEY QUOTE:

“Our second quarter results fell below our expectations as a result of unexpected events and the difficult global operating environment. Despite the challenges, we continue to make progress on our Full Potential plan. We are in the early stages of our strategic supply chain initiatives. Our innovation pipeline is more robust than it has been in years, and we continue to invest in building our global brands. I want to thank our associates around the globe for their ongoing commitment to serving our consumers and customers.”

— Steve Bratspies, CEO, HanesBrands