Business Segment Information | Business Segment Information The Company regularly monitors its reportable segments to determine if changes in facts and circumstances would indicate whether changes in the determination or aggregation of operating segments are necessary. In the second quarter of 2024, the Company announced that it reached an agreement to sell the global Champion business as discussed in Note “Assets and Liabilities of Businesses Held for Sale” and as a result, this business was reclassified as held for sale and reflected as discontinued operations for all periods presented. While the global Champion business was reflected within all reportable segments prior to its reclassification to discontinued operations, the U.S. Champion business made up the majority of the Company’s former Activewear segment. Accordingly, the former Activewear segment has been eliminated and the segment information herein excludes the results of the global Champion business for all periods presented. As a result of the strategic shift and resulting reorganization, the chief executive officer, who is the Company’s chief operating decision maker, began reviewing all U.S. innerwear and U.S. activewear operations together as one U.S. operating segment and the Company’s operations are now managed and reported in two operating segments, each of which is a reportable segment for financial reporting purposes: U.S. and International. In December 2024, the Champion Japan business, which was previously reported within the International segment, was classified as held for sale and reflected as discontinued operations for all periods presented. Accordingly, the Champion Japan business has been excluded from the International segment information herein. These changes have been applied to all periods presented. These segments are organized and managed principally by geographic location. Each segment has its own management team that is responsible for the operations of the segment’s businesses, but the segments share a common supply chain and media and marketing platforms. Other consists of the Company’s U.S. Sheer Hosiery business prior to its sale on September 29, 2023, certain sales from the Company’s supply chain to the European Innerwear business which was sold on March 5, 2022 and short term support and transition service agreements for disposed businesses. The Company’s U.S.-based outlet store business was also reflected in Other prior to its reclassification to discontinued operations in the second quarter of 2024 as discussed in Note “Assets and Liabilities of Businesses Held for Sale.” As a result of this reclassification, the results of the U.S.-based outlet store business are excluded from the segment information herein for all periods presented. The Company’s chief executive officer is the Company’s chief operating decision maker (“CODM”). The Company’s CODM manages business operations, evaluates performance and allocates resources based on the segments’ net revenues and operating income. The CODM reviews net revenues and operating income each month while considering variances compared to forecast and changes from prior periods. The Company reports inventories by segment as that information is used by the chief operating decision maker in assessing segment performance. The Company does not report its other assets by segment as that information is not used by the chief operating decision maker in assessing segment performance. The types of products and services from which each reportable segment derives its revenues are as follows: • U.S. primarily includes innerwear sales in the United States of basic branded apparel products that are replenishment in nature under the product categories of men’s underwear, women’s panties, children’s underwear and socks, and intimate apparel, which includes bras and shapewear. This segment also includes other apparel sales in the United States of branded products that are primarily seasonal in nature to both retailers and wholesalers. • International primarily includes sales of the Company’s innerwear and other apparel products outside the United States, primarily in Australia, Latin America, Asia and Canada. The Company evaluates the operating performance of its segments based upon segment operating profit, which is defined as operating profit before general corporate expenses, restructuring and other action-related charges and amortization of intangibles. The accounting policies of the segments are consistent with those described in Note “Summary of Significant Accounting Policies.” Year Ended December 28, 2024 U.S. International Total Segment net sales $ 2,581,137 $ 908,433 $ 3,489,570 Reconciliation of net sales: Other net sales 17,868 Total net sales 3,507,438 Less (1) : Media, advertising and promotion 138,606 37,913 176,519 Distribution 169,058 73,834 242,892 Other segment costs (2) 1,724,621 690,180 2,414,801 Total segment operating profit 548,852 106,506 655,358 Reconciliation of operating profit: Other profit (loss) 2,550 General corporate expenses (225,997) Restructuring and other action-related charges (229,223) Amortization of intangibles (16,740) Total operating profit 185,948 Other expenses (47,441) Interest expense, net (195,901) Income (loss) from continuing operations before income taxes $ (57,394) (1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. (2) Other segment costs include cost of sales, marketing, selling and other administrative expenses. Year Ended December 30, 2023 U.S. International Total Segment net sales $ 2,636,656 $ 933,067 $ 3,569,723 Reconciliation of net sales: Other net sales 69,663 Total net sales 3,639,386 Less (1) : Media, advertising and promotion 90,415 37,205 127,620 Distribution 177,531 69,510 247,041 Other segment costs (2) 1,964,437 717,519 2,681,956 Total segment operating profit 404,273 108,833 513,106 Reconciliation of segment operating profit (loss): Other profit (loss) (1,189) General corporate expenses (204,019) Restructuring and other action-related charges (22,799) Amortization of intangibles (18,821) Total operating profit 266,278 Other expenses (37,761) Interest expense, net (214,187) Income (loss) from continuing operations before income taxes $ 14,330 (1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. (2) Other segment costs include cost of sales, marketing, selling and other administrative expenses. Year Ended December 31, 2022 U.S. International Total Segment net sales $ 2,692,175 $ 1,010,541 $ 3,702,716 Reconciliation of net sales: Other net sales 160,093 Total net sales 3,862,809 Less (1) : Media, advertising and promotion 89,724 48,662 138,386 Distribution 195,448 70,899 266,347 Other segment costs (2) 2,004,306 746,607 2,750,913 Total segment operating profit 402,697 144,373 547,070 Reconciliation of segment operating profit: Other profit (loss) 21,774 General corporate expenses (228,782) Restructuring and other action-related charges (54,642) Amortization of intangibles (18,049) Total operating profit 267,371 Other expenses (8,294) Interest expense, net (131,733) Income (loss) from continuing operations before income taxes $ 127,344 (1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. (2) Other segment costs include cost of sales, marketing, selling and other administrative expenses. The Company incurred restructuring and other action-related charges that were reported in the following lines in the Consolidated Statements of Operations: Years Ended December 28, December 30, December 31, Cost of sales $ 91,179 $ 2,153 $ 13,645 Selling, general and administrative expenses 138,044 20,646 40,997 Total included in operating profit 229,223 22,799 54,642 Other expenses 9,412 8,350 — Interest expense, net — (1,254) — Total included in income (loss) from continuing operations before income taxes 238,635 29,895 54,642 Income tax (expense) benefit — 85,122 (413,766) Total restructuring and other action-related charges $ 238,635 $ (55,227) $ 468,408 The components of restructuring and other action-related charges were as follows: Years Ended December 28, December 30, December 31, Restructuring and other action-related charges: Supply chain restructuring and consolidation $ 171,529 $ 1,128 $ 14,345 Corporate asset impairment charges 20,107 — — Headcount actions and related severance 16,993 5,149 6,975 Professional services 16,488 3,819 23,994 Technology 1,859 8,347 11,922 Loss (gain) on sale of business and classification of assets held for sale — 3,641 (3,535) Other 2,247 715 941 Total included in operating profit 229,223 22,799 54,642 Loss on extinguishment and refinancing of debt included in other expenses 9,412 8,466 — Gain on final settlement of cross currency swap contracts included in other expenses — (116) — Gain on final settlement of cross currency swap contracts included in interest expense, net — (1,254) — Total included in income (loss) from continuing operations before income taxes 238,635 29,895 54,642 Discrete tax (expense) benefit — 85,122 (422,918) Tax effect on actions — — 9,152 Total included in income tax (expense) benefit — 85,122 (413,766) Total restructuring and other action-related charges $ 238,635 $ (55,227) $ 468,408 Significant restructuring and other action-related charges within operating profit are discussed below. • Supply chain restructuring and consolidation charges in 2024 include: ◦ $80,748 reflected in the “Cost of Sales” line in the Consolidated Statements of Operations, primarily related to charges of $53,953 to write down inventory as a result of further SKU rationalization efforts and $20,334 for severance and related employee actions for impacted supply chain facilities; and ◦ $90,781 reflected in the “Selling, general and administrative expenses” line in the Consolidated Statements of Operations, primarily related to charges of $72,047 for impairment of an owned facility that was classified as held for sale and a right of use asset for which the leased facility was not in operation, $10,921 for accelerated amortization of right of use assets for leased facilities that the Company expects to exit before the end of the contractual lease term, and $3,590 for headcount actions and related severance related to restructuring and consolidation efforts within the Company’s supply chain network. • Supply chain restructuring and consolidation charges in 2023 and 2022 are reflected in the “Cost of Sales” line in the Consolidated Statements of Operations and primarily represent supply chain segmentation charges to restructure and position the Company’s distribution and manufacturing network to align with its demand trends. • Corporate asset impairment charges in 2024 include charges of $10,395, reflected in the “Cost of sales” line in the Consolidated Statements of Operations, primarily related to a contract termination, and $9,712, reflected in the “Selling, general and administrative expenses” line in the Consolidated Statements of Operations, primarily related to charges for impairment of the Company’s headquarters location sold in 2024. • In addition to the charges discussed above, the following restructuring and other action-related charges are primarily reflected in the “Selling, general and administrative expenses” line in the Consolidated Statements of Operations in 2024, 2023 and 2022: ◦ Headcount actions and related severance charges related to operating model initiatives. ◦ Fees for professional services that primarily include consulting and advisory services related to restructuring activities. ◦ Technology charges related to the implementation of the Company’s technology modernization initiative including the implementation of a global enterprise resource planning platform. ◦ The (gain) loss on sale of business and classification of assets held for sale related to the sale of the Company’s U.S. Sheer Hosiery business, which was sold to AllStar in 2023. See Note “Assets and Liabilities of Businesses Held for Sale” for additional information regarding the U.S. Sheer Hosiery business. • Restructuring and other action-related charges recorded in the “Other expenses” and “Interest expense, net” lines in the Consolidated Statements of Operations included the following: ◦ In 2024, the Company recorded a charge of $9,412 in the “Other expenses” line for the write-off of unamortized debt issuance costs related to the requirement to pay down a portion of the Company’s outstanding term debt under the Senior Secured Credit Facility with the net proceeds from the sale of the global Champion business. ◦ In 2023, the Company recorded a charge of $8,466 in restructuring and other action-related charges related to the redemption of its 4.625% Senior Notes and 3.5% Senior Notes. The charge, which is recorded in the “Other expenses” line, included a payment of $4,632 for a required make-whole premium related to the redemption of the 3.5% Senior Notes and a non-cash charge of $3,834 for the write-off of unamortized debt issuance costs related to the redemption of the 4.625% Senior Notes and the 3.5% Senior Notes. ◦ Additionally, in 2023, in connection with the redemption of the 3.5% Senior Notes, the Company unwound the related cross-currency swap contracts previously designated as cash flow hedges and the remaining gain in AOCI of $1,254 was released into earnings at the time of settlement which is recorded in the “Interest expense, net” line in the Consolidated Statements of Operations. See Note “Financial Instruments and Risk Management” for additional information. Restructuring and other action-related charges in 2023 included discrete tax benefits of $85,122, of which $80,859 was recorded in the fourth quarter of 2023, representing an adjustment to non-cash reserves established at December 31, 2022 related to deferred taxes for Swiss statutory impairments, which are not indicative of the Company’s core operations. In the fourth quarter of 2022, the Company recorded a non-cash discrete tax charge of $422,918 to reflect a full valuation allowance against the Company’s U.S. federal and state deferred tax assets. As of December 31, 2022, the Company concluded that, based on its evaluation of all available positive and negative evidence, its U.S. federal and state deferred tax assets were no longer more likely than not realizable. In making this determination, the Company evaluated positive evidence, including its projections of future taxable income which demonstrate a long-term return to profitability in the U.S., and negative evidence, including recent tax losses incurred and expected near term tax losses in connection with its domestic operations and the lack of sufficient taxable temporary differences expected to reverse in future periods, and determined that the negative evidence outweighed the positive. Restructuring and other action-related charges in 2022 also included the tax effect on actions, which represents the applicable effective tax rate on the restructuring and other action-related charges based on the jurisdiction of where the charges were incurred. As of December 30, 2023, the Company had an accrual of $10,890 for expected benefit payments related to actions taken in prior years. During 2024, the Company approved headcount actions and related severance to align its workforce and manufacturing and distribution network with its strategic initiatives resulting in charges of $58,779 for employee termination and other benefits for employees affected by the actions. The Company recorded $20,370 of these charges in the “Cost of sales” line, $20,547 in the “Selling, general and administrative expenses” line, and $17,862 in the “Loss from discontinued operations, net of tax” line in the Consolidated Statements of Operations in 2024. The charges related to continuing operations, which totaled $40,917 in 2024, are included in the “Supply chain restructuring and consolidation” and the “Headcount actions and related severance” lines in the restructuring and other action-related charges table above. During 2024, the Company made benefit payments and other adjustments of $27,494, resulting in an ending accrual of $42,175 which is included in the “Other” accrued liabilities line of the Consolidated Balance Sheets at December 28, 2024. December 28, 2024 U.S. International Other Unallocated Total Assets Assets: Inventories $ 711,323 $ 146,190 $ 13,531 $ — $ 871,044 Assets held for sale — — — 160,023 160,023 All other assets — — — 2,809,874 2,809,874 Total assets $ 3,840,941 December 30, 2023 U.S. International Other Unallocated Total Assets Assets: Inventories $ 806,347 $ 150,083 $ — $ — $ 956,430 Assets held for sale — — — 1,564,283 1,564,283 All other assets — — — 3,119,601 3,119,601 Total assets $ 5,640,314 Years Ended December 28, December 30, December 31, Depreciation and amortization expense: U.S. $ 48,132 $ 45,985 $ 44,005 International 11,029 10,643 12,314 59,161 56,628 56,319 Corporate 19,919 23,326 23,067 Total depreciation and amortization expense $ 79,080 $ 79,954 $ 79,386 |