Dive Brief:

• HanesBrands Inc. reduced its inventory 1% sequentially from year-end to $1.97 billion, according to its first quarter earnings call Wednesday.
• This inventory decrease was due to product and SKU reductions, as it sold through its higher-cost inventory and saw progress from its SKU reduction efforts.
• Hanes wants to exit 2023 with lower inventory, but it still remains a challenge, particularly for the company’s activewear line Champion.

Dive Insight:

Hanes has actively been working to lower its excess inventory. By the end of 2022, its inventory units were 6% lower than the prior year, according to an earnings release. The company hopes to maintain its momentum this year.

“We’re going to be very disciplined on inventory,” CEO Steve Bratspies told investors during its earnings call Wednesday. “That’s something we’re, I think, doing a much better job of today than we’ve done in the past.”

The first quarter of 2023 marks the third consecutive quarter of improvements to its inventory, but compared to first-quarter 2022, inventory increased approximately 8%, according to its earnings release.

Its SKUs have also decreased 45% from its peak, Bratspies said on the call, noting that the inventory of innerwear has balanced out faster than activewear. “It’s a different business, different channels, different competitors,” he said.

Activewear is beginning to even out, but Bratspies told investors he expects it to take time. He noted it will also depend on how consumers engage with activewear.

Hanes activewear sales decreased 19% compared to the year prior, which the company attributed to slowed consumer spending that resulted in lower point-of-sale and higher inventory levels at retail. Its innerwear sales decreased 4%.

Activewear is a competitive space and excessive inventory in this segment isn’t unique to just Hanes, with Nike experiencing it as a pain point as well.

“When you get an inventory backup of the scale that we have, people try to move it and try to move it aggressively,” Bratspies said.

Bratspies said once Hanes works through the near-term issues of inventory and the promotional environment of activewear, it will get a steadier base with the consumer.