Dive Brief:
- HanesBrands reported net sales of $1.4 billion in its second quarter earnings call Thursday, down from $1.5 billion year-over-year. The firm went from a net income of $92 million in the second quarter last year to a net loss of $22.4 million this quarter.
- The embattled innerwear brand said it was able to reduce total debt by nearly $100 million in the quarter, and that it had further reduced its inventory by 12%, or $255 million compared to prior year. The company also reported $3.5 billion in debt as of this quarter.
- Earlier this week, activist investment firm Barington Capital Group sent a letter to Hanes chair Ronald Nelson calling for current CEO Stephen Bratspies to step down, and criticized the overall Hanes response to its inventory management and its reaction to current economic conditions.
Dive Insight:
Bratspies, a former Walmart exec, joined Hanes in 2020. In its letter, Barington said Hanesbrands had lost $2.6 billion, or approximately 59% of its market value, under Bratspies’ leadership.
“We believe that the Company may need to retain a new chief executive officer with the necessary operating and merchandising skills and the industry experience to lead the business,” the letter stated. “Moreover, we believe the board must, in any event, add directors with relevant apparel, fashion, and manufacturing experience to assist and support management in restoring and enhancing shareholder value.”
In its earnings call Thursday, Hanes executives declined to address the Barington letter or its demands, and instead referred listeners to its response statement released Tuesday.
Last year’s second-quarter results were damaged by a ransomware attack reported in May 2022 that Hanes estimated at the time may have cost the company as much as $100 million in net sales for the quarter. In its Q2 earnings report for 2022, the company said the incident, which the firm referred to as a cyber event, cost $35 million dollars in adjusted operating profit. Hanes said the cyber attack temporarily affected its global supply chain network and limited its ability to fulfill customer orders for approximately three weeks.
While Bratspies didn’t mention last year’s cyber event in Thursday’s quarterly statement, he said second-quarter results were in line with the company’s outlook.
“We’re progressing on or ahead of plan in several areas, while other areas are not delivering results in the timeline we anticipated,” he said. “We’re taking a number of actions, including additional cost saving initiatives, to improve performance as well as actively looking across the business at additional options to enhance shareholder value.”
Looking ahead to the rest of the year, the company said it expects net sales of approximately $5.8 billion to $5.9 billion, which represents an approximate 6% decline compared to 2022. It additionally projected a free cash flow of approximately $450 million.
In July, HanesBrands promoted its interim finance chief Scott Lewis to the permanent CFO position. He succeeded Michael Dastague, who stepped down from the role on February 28 due to “family reasons.”
Meanwhile, company stock is down 54% in the past 12 months and 22% for the year as of press time.
