Hanes(US:HBI)2023-02-08 01:32Sales Performance - In 2022, net sales from the Innerwear segment were $2.4 billion, representing approximately 39% of total net sales[34]. - The Activewear segment generated net sales of $1.6 billion in 2022, accounting for about 25% of total net sales[36]. - The International segment reported net sales of $1.9 billion in 2022, which is approximately 31% of total net sales[37]. - Approximately 69% of total net sales were generated in the United States in 2022[39]. - Sales to mid-tier and department stores in the United States accounted for approximately 8% of total net sales in 2022[41]. - Consumer-directed sales in the United States represented about 17% of total net sales in 2022[42]. - Sales to other customers in the United States made up approximately 25% of total net sales in 2022[43]. - Internationally, 56% of net sales were wholesale sales to retailers, while 44% were consumer-directed sales through owned retail stores and e-commerce sites[44]. - The company’s top 10 customers accounted for approximately 45% of total net sales in 2022, with Walmart alone representing 16%[102]. - In 2022, net sales from the International segment were $1.9 billion, representing approximately 31% of total net sales[130]. Strategic Initiatives - The company completed the sale of its European Innerwear business on March 5, 2022, as part of its Full Potential plan[15]. - In June 2022, the company purchased the Champion trademark for footwear for $103 million, enhancing its brand portfolio[17]. - The company aims to grow the Champion brand globally and enhance e-commerce excellence as part of its multi-year growth strategy[14]. - The company is implementing a significant number of strategic initiatives focused on building a consumer-centric company and enhancing capabilities[79]. - The company is focusing on growing the Champion brand globally and enhancing e-commerce capabilities as part of its Full Potential plan[208]. Sustainability Goals - The company has established 2025/2030 global sustainability goals to enhance transparency and track progress on key metrics[21]. - By 2030, the company plans to reduce greenhouse gas emissions by 50% and indirect emissions by 30%[70]. - The company aims to improve the lives of at least 10 million people through health and wellness programs and diversity initiatives by 2030[73]. - The company has set a goal to eliminate all single-use plastics and reduce packaging weight by 25% by 2030[73]. - The company earned an A- score in the 2022 CDP Climate Change Report, placing it in the top 11% of nearly 15,000 rated companies[70]. Operational Insights - The company operates its own manufacturing facilities, with over 60% of apparel units sold produced in-house or by dedicated contractors[19]. - The company operates 30 manufacturing facilities, with most cutting and sewing operations located in Asia, Central America, and the Caribbean Basin[46]. - The company distributed products from 45 distribution centers as of December 31, 2022, including 16 in the United States[49]. - The company has approximately 51,000 employees, with over 88% located outside the United States[71]. - The company’s largest manufacturing facility is approximately 1.1 million square feet located in San Juan Opico, El Salvador[176]. Financial Performance - Advertising and promotion expenses were approximately $209 million in both 2022 and 2021, representing 3.4% of total net sales in 2022[56]. - The company has $1 billion in a revolving loan facility and $1 billion in a term loan facility, along with $900 million in senior notes due 2024 and 2026[112]. - The pension plans experienced a loss of approximately 10% in 2022, with a funded status of about 96% as of December 1, 2022[125]. - The company holds approximately $1.1 billion in goodwill and $1.3 billion in intangible assets, representing 36% of total assets[124]. - The company estimates net sales for 2023 to be approximately $6.05 billion to $6.20 billion, with an unfavorable foreign exchange impact of about $42 million[198]. Market Challenges - The basic apparel market is highly competitive, with significant competition from brands like Fruit of the Loom, Nike, and Adidas[57]. - The company operates in a highly competitive market, facing challenges from both domestic and foreign competitors, as well as online retail[80]. - Economic uncertainties, including inflation and geopolitical conflicts, may adversely affect consumer discretionary spending and sales[111]. - Pricing pressure from competition and consumer demand changes may negatively impact margins and profitability[126]. - The company faces potential penalties and legal liabilities due to non-compliance with various privacy and data protection regulations, including GDPR and CPRA[88]. Risks and Compliance - The company is subject to various legal and regulatory risks, including compliance with the U.S. Foreign Corrupt Practices Act and other international laws[135]. - The company's reputation and financial results could be adversely affected by improper conduct by employees or business partners[144]. - The company actively protects its intellectual property rights, but infringement or counterfeiting could diminish brand value and adversely affect business[148]. - Negative publicity from labor law violations by third-party manufacturers could tarnish the company's brand image and result in a loss of sales[150]. - The company faces risks associated with international operations, including compliance with foreign laws and unexpected changes in tariffs and taxes[130]. Future Outlook - The company anticipates restructuring and other action-related charges totaling $60 million, including $54 million related to the Full Potential plan[198]. - Diluted earnings per share from continuing operations are expected to be approximately $0.14 to $0.25[198]. - The company expects gross and operating margin pressure to continue in the first half of fiscal 2023 due to higher-cost inventory, with expectations of easing in the second half[196]. - The company may incur additional costs to protect employee health and safety in response to the ongoing pandemic[96]. - The implementation of a new global enterprise resource planning system (ERP) requires significant investment and may lead to increased costs and operational risks[90].