HBI - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Hanesbrands’ Third Quarter 2020 Earnings Conference Call. At this time, all participant lines are in listen-only mode. [Operator Instructions] After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference may be recorded. hand over to today, your like Mr. now the to conference host I’d T.C. Relations Chief Officer. Robillard, Investor ahead, go Please sir.

T.C. Robillard

everyone. Hanesbrands’ call quarterly day, investor Good And conference and welcome webcast. to the

found on today We release, XXXX. of updated the The of a release has in to and provide are we be chance everyone after replay here FAQ our a call the pleased an third document to Hopefully, can update section of news review website. our had quarter issued progress the today. be to Investors this hanes.com news earlier

DKNY today, uncertainties the either authorities our risks beliefs are or as filings call the may found impact to and exclude gowns. COVID-XX results that only face and to or coverings statements, the are made. references suppliers, to SEC to speak at governmental based to those results The remarks These action not that exited are the associated guidance, we PPE Protection pandemic the all the undertake does noted, our in regulatory which today’s company reflect the our rebased and our expectations current to and On term and which cause stated, include These consumer, Champion of and Garment the and as XXXX all may and well actual business are make The in charges statements, our business releases. or the those well detailed be comparisons materially. masks, combat statements revise include including with other consolidated related please Personal measures on that differ as in to news intimate Target subject website, results forward-looking question-and-answer or to the been risks These any year our session. risks restructuring license. financial prepared otherwise which operations, otherwise customers, partners on on related unless our labor taken forward-looking of and have CX the may of note prior in the relates face as and time Also and expenses. force. to also Unless pandemic operations update business various by our they to at program use business certain

Chief performance Interim Additional a GAAP, and can non-GAAP our information, Officer; press Chief these found and today With Bratspies, our Executive Steve other be Officer. call in measures Officer including and Financial on me Chief of Accounting reconciliation release. the today’s are Lewis, Scott to

will now it For Steve remarks the today’ Scott questions. call, and and then turn provide I your to to Steve. will open over some call brief up we’ll

Steve Bratspies

of to number welcome. I’ve the we’re a to I’m the curfews. everyone, want of In call encouraged first Thank of by I’d and and passionate to the and the lockdowns business. uncertainty. and to CEO this XXXX. excited excited continues begin also to on on to this adapt consumer team oriented to such the created be manufacturing, like It’s by has it you, able T.C. in And to with to assistance as our I’m journey. challenges way welcome team our announcements Good with our traffic great a lead impressed thank I’m growth entire you making team, on European new as and world for we warm our earnings my company. a and with for up the I regarding been get our to honored clearly significant their on business’ environment, fronts. The they’ve unpredictable respond this global and week’s stores everything pandemic ability on leading thanking as embark Board speaking around be websites. speed their challenges progress opportunity impacted from morning, I been Hanesbrands. the our

in defining of the organization. I we’ve and about and progress momentum ambition strategic revenue and toward seeing our the feel We’re business, good our goals made assessment already strategic the

current why sharing thoughts For as I’ll business by the to today’s this at, some to quarter guidance. for detailed great And call, of insights a I’ll strategic that review looking handing begin a process, off I Hanesbrands about on I’ll comments end attracted myself the initial what day. will was some I observations. as Scott performance a results our share my on began is assessment well more offer we with and few company. speak fourth before then we’re to opportunity. the some and first our on

have brands. We iconic

chain and global supply have breath scale. We

is would our has person. Asia, end, three product shareholder products traveling, the We background, CEO. first you sitting at weeks with to in from of like believer honest oriented. around pandemic this I the to tell transparent, I’d think teams growth spend strong Central the first foundation, altered I’m I both like to of change have and unvarnished, one the I visiting how with you. respect in as the Caribbean, to manufacturing a passionate I to of most value. build shareholder and in several transform genuine touring consumer sustainability oriented brands born heart, I our value. have There’s standing and brand and delivers being dedicated and to my sense to stories directly I be preference admired consistently global potential things in internally apparel am and a providing and that also certainly power with of I strong differentiate, and To big. be want give growth believe a companies, backdrop, balance With to The and my with America and months I growth global readiness like and approach. believe long drive communication, meeting great commitment big Hanesbrands insights. customers, a my that all globe. lasting our a With loyalty. My and a sheet. we facilities solid significant I’m spent for and appetite one With team that stores, change. a to opportunities see

frustrating our had virtual to questions, of be it’s get of team and tours. myself and I’ve learning and our I’ve a about plant global I’ve and of with able a businesses. interactions to via plenty meetings asking various face-to-face, out immersed While our lot been meet not and customers ton done listening. I’ve video

opportunities, Hanesbrands. day, the address challenges business. the define full call The successful potential. to the scope mentioned strategic first is and well long-term we we I From the we As reach will we began are our is on to unvarnished assessment of set as what be global short- as and assessment, detailed must evaluating This I It assessment ambition will there, goals. our portfolio. our we of which my plans strategic for will the our operating respect to objective entire a our truth. the achieve build foundation on With our

historical geographies looking We’re performance, channel trends, and category across at dynamics competitive segments. and business landscape

our cost analyzing categories. spend structure We’re across

we’re we’re of and our the current how at looking and level organized. We’re mix inventory analyzing

technology We’re processes. concept our and consumer infrastructure our also supply our studying chain, to

and direct-to-consumer online capabilities. We’re evaluating our

product analyzing quality. We’re brand and mix, our measures our consumer our equity

are at We’re by how we even retailers. perceived looking

great me leverage. that company we with is share from strong initial our can So a let work observations some foundation to-date. a This

accelerating, us full environment be more reach and change an potential, where become of in centric the a agile, we However, for to successful consumer is company. oriented pace must our growth

change, that Hanesbrands So embraces become to going what act decisively, a It shares and align means mean? a to common does this company that moves quickly we’re ambition.

The mindset. at consumer be will the that consumer we is We a do. going of centric everything center have to

streamlining making, concept to flexible particularly will consumer. faster organizational simplifying structure, processes decision We and become around and by well as more as

to We will growth. commit

Momentum particularly centric capturing chain For Champion opportunities. well the example, globally, consistent as Bonds to Things the And return online. approach and brands, Activewear we new in surprisingly, need brand supply Bras applying and to in consumer our more we evolving not as will U.S. Australia, year-over-year growth capabilities our support to and N by a growth the

to going enable improve capabilities certain and for position speed, build to and the means it efficiency Lastly, company long-term success. we’re growth

modernize our We for technology. opportunities are to looking

the to the and expand we’ll meet digital our chain to current businesses. must our be at our online talent, and We’re looking of We leaders. and diverse growth able segmenting invest capabilities brands accelerate and time filling of to our focus supply developing needs unique share also to market in while next-generation our capture gaps, of

and excitement current will global targeted. of genuine engaged be investments cost structure a review already there’s and used team I desire can opportunities near-term of about lot fuel made. and some the highly our be progress for of change. identify that good a to very we’ve feel our savings started Our investments. energy, to comprehensive The is We’ve deliberate a

be moving I shareholders. people will a fast. We’re journey and multiyear our and purpose both working will with rewarding we’re that believe for This our be

You’ll begin progress quarter of to months. to we on our the parts strategy unfold our see look over and you updating forward coming this

the with expectations. Overall, review quarter flow Turning profit, our a share to third earnings cash our of operating a above coming revenue, detailed operating had results. solid per results. Hanesbrands provide more and Scott in will

key focus on takeaways quarter. I’ll comments four from my So the

we First, across saw momentum business. the good

sequentially improve each business trends of segments. revenue apparel in As our

point-of-sale broad we restocking are point-of-sale the quarter, the in XX.X% levels, to therefore by remains Despite retailer trends increased expect of inventory quarter. continue the inventory level retail continued year’s Sales shipments over in by PPE prior some retailers. U.S. Innerwear. excluding below exceeding We in driven fourth encouraged by and year, at strength restocking based last

XXX% down where the primarily and declined Sports year with Apparel shut global We’re our quarter. related bookstores. sporting have from headwinds COVID X% Compared pleased in second Champion last nearly business, sales events as essentially to college the increased improvement to due sales

Excluding this, increased challenges impacted sales also the prior Champion COVID sales supply in year. Absent were these would two X%. down by driven We over items, have quarter. been

we Global supply in up We into fourth quarter bookings expect Spring year. and Summer with over the to levels, XXXX momentum expect next to carry XXXX to challenges Champion’s improve

the There’s excited global of and potential for years. a the lot growth Champion. opportunity Looking in over several forward, next I’m confident

which that margins half call. headwinds, quarter. profitability The last timing SG&A the and The we’re in second are takeaway expense to higher fourth negative both and is on of second quarter’s gross variances mentioned operating pressure were manufacturing expected facing

facing COVID the We’re trends. also uncertainty from additional latest

flow. of cash quarter, we generating Third, another flow delivered million cash $XXX nearly operating strong

provides year and further quarter the uncertain with inventory, positive strengthen end And PPE we environment. believe for flexibility generate and quarter, fourth year. than the in for flow to in continue expect takeaway the anticipated second billion we of this the us the plenty now our in $X operating the which liquidity, liquidity we operating of with we to cash with to While expect full higher half

closing, we’re increasingly in progress an making So, in environment. unpredictable

We’re revenue business. momentum in our seeing good

moving We’re strategic our assessment. quickly and cost with

building and more believe and agile, excited will our company. opportunities plans to our We’re shareholders. people I I’m defining to that our journey, both identifying our this our growth to be oriented ambition, begin rewarding consumer multiyear centric become when

want turning commitment the the this XX,XXX I’ll thank Scott. globe time. challenging call incredible our around more call I Before to with team over for over, our to customers And during than serving their to dedication and the turn of that,

Scott Lewis

Thanks, our in above restocking. all Overall, momentum and a strong Dave. but the key across results of quarter, across inventory the trends coming base strength driven and continued Hanesbrands expectations. by our point-of-sale continued Revenue business had broad metrics

over and further strengthening were of position. declined cash our less liquidity anticipating generated than flow, expected, $XXX prior operating margins we year, As million but we

the results. to of Turning details the

exchange year prior quarter’s rates quarter. to expectation of Third $X.XX revenue billion, than over quarter accounting performed our foreign better for Apparel points but the XX the for sales growth. X% basis increased

manufacturing basis as to negative P&L. XX% over year year, represents revenue year, which in points Excluding incurred earlier XX.X% approximately Adjusted as segment Adjusted significant experienced variances, the were a inventory This prior XXX operating year. to to $XXX decline sales gross declined from of million margin compared and sheet decreased onto rolling declined off sequential the a and points approximately over revenue improvement quarter’s reserves, year-over-year due of last a last increased balance well XXX improvement Apparel basis the X% XX.X%. the prior margin PPE as trends.

initiatives. margin approximately COIVD million from other than expected approximately restarting offset of in in form due higher pandemic. experienced we point-of-sale. serve expedite for manufacturing closed March well business was resulted to costs incremental in $XX as freight meet In relative in the Restructuring as already decision, demand as third-party to in space. operating normal ongoing We portions and XX network track to actions our the are the manufacturing We in SG&A from non-recurring shipments weeks our sourcing and and Remaining on and of stronger These freight, in associated temporarily from cost. best relates retail that customers, and from actions costs million previous premiums were to air a effort newly long-term disclosed were As costs COVID well $X partially as costs million savings our the and quarter, charges previously believe benefits This of to disclosures. we costs beginning manufacturing chain unchanged by form via and this and controls, a costs. pressure gross of chose the $XX short-term related cost our captured recovery benefits restructuring right our were temporary their program remain shelf leverage seeing are exit these supply capacity. fact, an

adjusted XX.X%, decreased And and XX% prior $X.XX, over respectively. was in quarter Our year with to expectations. and which XX% earnings was tax for our $X.XX share and GAAP line per rate the

Now, segment our performance. take me you through let

the For revenue. Basics, driven increased and in over U.S. XX% XX% the million increase Innerwear by Intimates X% $XXX a quarter, sales increase year, of inclusion PPE prior of in

rate. Within a gains share bars the increase impacted double-digit to than market in by the continues be PPE, we which drove experienced increased pandemic. point-of-sale trends positive category This retailers. that prior XX.X% by in each basis which to negatively Innerwear shapewear business, Intimates and In is at the of continued Basics points sales growth sales, Excluding Coronavirus our product a quarter. inventory in year, U.S. the more offset decline restocking due category, approximately XXX over sales

Looking have trends through positive and order seen forward October. continue we point-of-sale

that While these inventory of retail level last trends, well in expect some to continue as below year, fourth the remains as we restocking quarter.

next. prior approximately XX.X%, XX For higher expanded driven the product points it basis unit as quarter, over favorable well Innerwear’s margin fixed as operating volumes, by from cost to leverage

Sports margin compared XX% was improvement quarter. last headwinds. year-over-year from to related Turning which second decline year, the declined COVID vast XX% from an impacted Revenue U.S. to significantly The our is operating Activewear. the by for business, which continues be to of third X.X% decline. quarter’s the majority Activewear’s Apparel

As due decline deleverage for inventory negative variances, year SG&A brands, compared some margin to well volumes. non-Champion of timing expected, lower prior of from reserves our manufacturing Activewear’s the as to sales as

sequential brand a Champion. XX% majority from quarter. year note I However, to Sports the significantly briefly segment Activewear quarter’s the International is improvement of revenue of decline Despite margin from sales XX% a on year, within to increased Adjusting declined Revenue by to from our improved channels Apparel, significant fourth we that compared sales, basis as will product COVID online, prior the Touching on the Champions key due Sales revenue the Switching core point-of-sale second XX% the segment in Apparel availability. declined the improved decline challenged X% second to in quarter. quarter our on as and to vast compared and growth Compared last trends last operating driven reported which approximately X% as Champion where constant loss. in business. International currency expect declined segment. well PPE Sports a in the improvement last challenges to continue for the a basis. year X% continued in

the International Champions quarter, over increased For year. sales prior X%

partially prior the European our which the continued declines approximately tight than Americas businesses. driven foreign offset slowed operating SG&A we to Europe more volumes, have margin retail cost segments exchange lower points challenges Australia management. declined businesses, offset sales deleverage basis by by from growth and by related and XXX International was recovery. years XX.X%, Innerwear, over was in experienced Excluding Champion COVID rates, This where our impact in from Asia

million $XXX cash Turning to flow, quarter. operating of the in flows generated cash we

X% inventory comparable net year, XX% our basis, debt-to-adjusted prior and inventory, was approximately balance the year. declined end sheet, in at excluding was the PPE with last line EBITDA of over million sales Looking growth was on a prior which compared times increased includes Leverage quarter at year. which $XX to of X.X to inventory PPE

post-COVID the to of $X while We and billion in We position return to liquidity, of billion our strengthen times. quarter $XXX would remains quarterly with quarter. the focus even the further focus liquidity quarter, end $X.X the our the paying leverage short-term X above debt liquidity regular approximately a environment, reducing at ratio be million second our dividend. While our below ended

believe capital we And We significant have continue to uncertain in cushion guidance. environment. this turning to now

outlook reflects to Our continued the the uncertainty due COVID-XX pandemic.

other is place the items curfews reflects lockdowns and based outlook Our in which put among business the current environment, week past in over on Europe. the

and environments, lockdowns want details. everyone comparisons Our our results consumer that FAQ any potential our points I rebased additional year-over-year the to guidance closings. XXXX and governments additional also release impact outlook reference institute should does for document to all operating press to store not businesses or or remind reflect you

$XX of the fourth X% expect quarter, week’s of Part decline assume $X.XX prior For Included European a billion, sales midpoint this XXrd growth. outlook billion the our in total a a sales, on is to lockdowns of million contributions approximately PPE $X.X our million single-digit and benefit we outlook exchange $XX at week. sales which approximately foreign over at year. low implies revenue the

higher million. implies $XXX timing adjusted to of of to is margin the SG&A the We manufacturing pressure midpoint an negative expect of operating XX.X%. due operating to $XXX profit year-over-year Expected million margin expense. variances But and

XX.X%. a We expect interest approximately of $XX tax and rate expense other million approximately of and

guidance to flow is cash and from includes higher anticipated per on implies $X.XX to Our cash guidance $X.XX $XXX to year-to-date million Based inventory. fourth full which our million. from impact this operating of the approximately million than and our operating PPE $XXX million, respectively, the XXXX earnings $XX $X.XX, GAAP for year quarter flow, flow and share $XXX range for adjusted $X.XX to cash

unpredictable by encouraged the through we’re increasingly closing, in managing I’m environment. So, how

in revenue our doing to call over forward we’re business. momentum journey look back our to And strategy that, to turn with I’ll define excited I’m our good seeing strategic the about the and We’re assessment ahead. T.C.

T.C. Robillard

Thanks, Scott. That prepared our concludes remarks.

now the begin call your and the back taking Operator question-and-answer Operator? will turn the to over we begin time continue as I’ll We questions allows. will to session.

Operator

[Operator with Instructions] question of first Saad Our line a comes Evercore ISI. Omar from

Your now is open. line

Omar Saad

question. Thanks brand opening Steve, you’re guy remarks in product taking at heart. and you welcome. mentioned the morning. that a Good Steve, for your

likes You big. think to

and to -- to assets, your level through to love guess I’d process. Champion. you hear get it. company’s brands. two going love know think strategic two about straight I’ll I a Hanes these of you’re for review I’d If So still at the a we core kind what I vision is high

so different what they’re And of you them, as of of view brands? the each kind strengths Thanks. obviously, because core

Steve Bratspies

Thanks, amazing with on it. quite brands different the journey. are really work to frankly, am really I Omar. places their Yeah. have in two Appreciate excited to opportunity that,

Let time really with known frankly, me aren’t little penetration, Hanes It brands, has obviously categories been in and install long leads an in many its around and start relatively growth. in incredible a it’s categories position cases lower that, base. share bit, a a lot awful from very well household quite really, big of

when make time. look look to lot of engaged a loyalty the becomes they it. game. has how purchase think all consumer share do we a gain at big all beyond we that’ll It Hanes, the our lens everything ability over the positive hear the of sure and share, core build the company is they for we that. start brand And to really it can from them brand, we’re at good it time younger where little purposeful me of So and demo we’re differentiating talk to its and that Intimates a product, through the centricity the developing way need I have way directly. equity the consumer strategically a really beyond will through today. into first And do, about our and how to And into that they’re is this and scores. they’re we That you’ll of sure Hanes trust for that sure really that and quality like usage we where channel make our little and to idea experience, a that’s further a we it. really consumer known about making value see have think strategies things bit to very also business, where bit comfort. in over growing, People the step aging a to and make and It’s and like products when very build you’ll influential a really dig talking large, you reach do we really we want need But brands just we business business, our and do to can

to So working to that today. choices you’re I there’s some base, to fine need markets off if we specific the new -- it it’s incredible be made But just real we Hayes in world. tune an think competing for in need

position. was Champion a be main and work to that What you, reasons different of with bit I’ll opportunity the the one here it has. with Now potential I Champion honest little the came on with

not really brand. around and coming called all new It’s reverse new trying. a about coming. presents one I brand saw, which making women and and a developed, of Activewear more some about young South around technologies it of much of is around some loss, in Do brands, Hanes platforms to the really repellent. highly the of While is new presence. you’re across die innovation. by lot of segmented Stormtech, some good technology you weave opportunity global to water released look from a seeing exciting Korea. share that the different here, our you growth a over consumers. we’re of lot globe, and categories, and share with small we’re lot position There’s share doing particularly Board of But target a challenger a lot Champion things product when in a from grow time category, -- There’s excited are platform market perspective, taking The out is And China the what broader opportunities new that that kind and we’re that just has talking different one a things a at

to occasions share the lot segments in. a of brand gain into this So all different new there’s opportunity participates it expand across and usage that

opportunity, of a just we But to. take a been do, need future of journey huge They’ve this to on work I successful. think both the can of at I lot the us where have think we’re lot of to the to potential. we’re beginning get they go. So to brands scratching surface just where But

Omar Saad

That’s great, Thanks. Steve. Good luck.

Steve Bratspies

Thank much. you very

Operator

question Our Yih Adrienne next comes from Barclays. with

open. Your is line now

Adrienne Yih

change my And past Great. welcome, Thank current growth have low for of as over consumer growth as I’m digital the the decline. is, strategy? of this much, your play guess, you you the into change next you couple perception sort digital, mentioned how very component you that that… transformational I secondarily, over last, And does single-digit Steve, wondering as recognized a an programs, or technology of and are term about and what such big well. months? to the what’s the single-digit all two can Steve, IT And my talk investment -- if first to itself longer -- in question then outsider And that shift just the low transformation? then work of in

Steve Bratspies

Yeah.

Adrienne Yih

you’re U.S. … lockdowns European the recent or in seeing the COVID surge also the has from what in come

for more direction? the can much. the give what’s change you If -- with the very Thank change color you that impetus us in any on

T.C. Robillard

This Hey. T.C. Adrienne. Sorry, is

Your line and was cutting in out.

for. we’ve were think looking I what you got

kind current of consumer kind perception. Steve, for, looking of you’re So

was… one other The

Adrienne Yih

Yeah.

T.C. Robillard

-- change, last factory guide how think the you I’m into broke in I digital kind … terms part you’re were think hear… it or to of that. am around items one kind couldn��t transformational of of I were sounded sorry, I out, just like the you -- of at the you looking talking more I And

Adrienne Yih

Correct.

T.C. Robillard

can that that last repeat you part be great. …if would

Adrienne Yih

Sorry. Yeah.

about that. Sorry

the now it from a be COVID U.S. surge the -- Europe recent basically, grows recent low changes Scott, single-digit, For that the in down of was down then and in would slight to the original here guidance to

more there the Thank some color in that get Just Some that channel? from would you’re color you great? seeing are more be demand you. on

Steve Bratspies

Adrienne. this. Thanks, for Thanks Okay. repeating

In I from, of a terms brand. came wasn’t how lot trending was came my position to a view before and And into a I I it. insight that and perceptions brands viewed did of and Very have what understand things and obviously frankly, consumer quite different and here the what trending positive. of lot had environment consumers retail research

positive the some said they where I you’re I are But there’s particularly on from earlier, I today. position work think So as a positive new to very starting do viewed think, consumers. to all brands Hanes, But are position. reach

of we going internal And how we We’re to decline digital, by and become piece consumer we there’s operate that. not our go-to-market. a you do things it. systems. big In to more about not like companies and true as equity today, in not -- where or general, a most in of How just our take more need but facing It’s penetration business, the way, an be Digital issues them forward. question. into second will kind moving your

and purposeful and but One some how things an it’s our want of don’t go-to-market with our Champion that. have have go-to-market and Underlying thoughtful perspective, we versus and brands. The and the we’re in by opportunity. for do we that going be versus that Berlei. purposeful digital have we’re from the an spend channel those that answer Hanes digital technology to to is strategy that digital a very on think, may of I different understand with terms be brands to very time I strategy strategy for be more today, to going thinking the how And going we’re about to work do, different some strategy we you

business. COVID revenue bit in a then it to And we you year-over-year we our expect the the Obviously, new to to the how momentum quarter would business, we momentum. and be Activewear for that, efficiency, is to channels going revenue to our you in sequential as see positive we a be modernize to been improve of benefit our see Sports there. improvement heard not that in that the using but it’s be we our building tying I’ve chain, big strong us Champion recent how directly, and continue on business speed the we as continue the now, see -- finally will Clearly, quite growth to continue in our our expect technology demand tell QX, most and word guidance, fourth a supply about third as a Innerwear good but results have Apparel the big numbers, and still maybe quarter. highly to have We going we the what benefit, operate. tying trends trends. to I So opportunity there to a business saw announcements related. which to account obviously feel help yes, into in is overall on last our for right is changed these going to is it those we’re frankly, we we in point go-to-market, in took how prove your continued expected restocking the from and drag Europe. together, And answer

is. transparent of data at kind in much of can and to live trying as that terms the what coming the as be of guidance we’re include kind us as as can we is So be of we

Operator

Bank. comes question Paul next from Trussell with Our Deutsche

Your now line is open.

Paul Trussell

to welcome wanted just I base and morning Steve. touch Good this Hey. performance. on quarter’s also margin first Maybe

bigger into just item that a Also, just how go detail the Let around forward? line just should just maybe think and picture talk within me headwinds more on the… of going margin key bit gross and we about little some

T.C. Robillard

next apologize, was? we start hear you line I mean where to to don’t cut out. the Paul, got going I’m you you -- gross had the the just interrupt from Can I can’t margin forward. sorry, question, the can question just second again I I mean, Paul.

Paul Trussell

Yeah.

that. about It’s about Sorry just PPE…

T.C. Robillard

Okay.

Paul Trussell

just process forward? the strategy impact the going the to and P&L, And thought

T.C. Robillard

Got it.

you. Thank that. about Sorry

Scott Lewis

Yeah. Good and for question. your morning thanks

off start hit with I’ll SG&A. and So your impact there bit to speak questions gross of and margin we had on also on little the that a

little initially with we a -- it better We starting came So a we margin, year-on-year actually this. lower didn’t gross anticipate bit had expected. we but and in was than

was pressure. we that Our margin gross points two from year. causing And the downward headwinds within gross basis margin then had down last were main XXX

more that. little a background variances, which negative The And than for on little of the bit half manufacturing first decline. just of was accounts a

inventory have planned, have onto earlier as sales incurred, sold. reminder, and unit the the P&L year incurred these balance roll and production companies that of on the this capitalized were like specific lower variances, they we had is sheet then raises initially are the per cost unit. off variances who manufacturing cost a operations, from So, supply fixed as chain those other These the are essentially as you which

this quarter. our reserves and other Now primarily margin we the relates inventory it business was Sports Innerwear covers remainder of reserves in headwind Apparel the actually Europe, decline These recognize the Hanes and the to gross additional that business.

move As you down the P&L, down points. operating was margin XXX basis our

to So from gross that headwind controls cost lower of put savings offset from earlier see this temporary the able place tight some this resulting were you and that benefits we margin we can related cost And SG&A. with in and year. COVID issues

there Now, that are higher. in SG&A couple are items a

supplies we strategic health to it costs related employees costs, and started and earlier, COVID and we’ll like, which our continue of were related we’re customers, addition developing this, quarter. mean, also, actually to that in the incremental to protect had we speaking and this the our I in We some quarter assessment. that incurring cleaning And second to that started have some

those forward. So we’ll have that and moving impacts

quarter margin other we be to half of profit call, and going second that be Now, give speaking the are some the fourth the the declines is you that earlier will we gross variances side. negative related manufacturing expected, have into about spoke this were The the half let flowing through forward margin half headwinds half gross me to Within moving around quarter. on both down to in they incurred our reference in last our is margin, that into of we SG&A. to I to and going is to margins color made and the the like those. about in And be decline fourth in year,

into -- -- you not thing see behind the to we did can can go are that will will impacting flow early as variances QX that out into QX on XXXX. is, we headwinds balance as we next actually year that currently the the be sheet these us are one will that I specific Now as and see P&L through want point

And margin actually have gross about SG&A, roughly sales other of going half lower several impact is margin. mix. to are the items split decline just on we the The then and in product kind between that volume of same

deleverage the fixed. is is from SG&A cost remind to you, fixed just first The lower volume sales and two-thirds our about of

which lower the normal our last quarter The some fourth compensation year than -- in some of were expenses second level. of some item than timing actually to relates that related

will year-over-year versus I’d related assessment developing So necessarily impact strategic recurring impacted to the And not those of a speak having. we the with those and is ongoing, couple COVID costs which things item QX last more this higher cost. computability that then that is associated QX costs really XXXX, also

Steve Bratspies

And to the I would about be Hanes move make able the you PPE lot wasn’t the that yet, pivot, to and company and by will, happened, of pivot just the organization at it and of say, just pretty at move. if lost inside what bit. of as Paul, were the ability impressive strength that to part that a of One, but let leveraging talk little revenue I brands and point me occurring proof as a PPE great the replace pace company to they a was able time the really do opportunity

million market terms $XXX the sales this It’s sell going really market long-term this PPE. point. changing. in So opportunity $XX talked see I thought very continue us We to that The expecting as unclear a quickly was going remains out the QX. is about pretty of a But they’ll about change of at moving to opportunity forward, impressive. we’ve forward It’s there. very -- business in an fragmented be for -- lot

it for see So XXXX thinking we’re we’ll could about But this opportunity the going have in a and change and progress factoring we’re as the consider us is positioned to way point. and for it market. not in a at that kind of that huge should forward PPE business you near-term how as things

Operator

Our with James. Matt McClintock question Raymond from next comes

line Your open. is now

Mitch Ingles

Ingles This for journey. Hey, taking in Steve, Thanks and filling Congrats, new everyone. for starting Matt. my a question on Mitch is

So orders the quarter, following which there, third in compares you there what year-over-year? to European my to seeing Also is, led increasing the in year-over-year what decreasing question quarter-to-date? lockdown first the Champion region this Innerwear new are Europe

Scott Lewis

question for third around the the in is trends So we Europe -- saw quarter? your kind of topline sales

Mitch Ingles

Yeah.

parse Europe and Innerwear difference decrease. if European Just kind between correct, Innerwear of Champion Europe, increase I’m year-over-year, and European out the Champion

those out playing in two wholesale over just and DXC how brands figure trying is So Europe. for to

Scott Lewis

Yeah.

we speaks about businesses, Steve as again, of what Champion with our those So earlier think two brand. was kind actually to about talking

quarter by So well wholesale this within largely online. that Europe, we and our growth had by strong driven the and our perform led Champion and Champion Europe and did brand very business

And so over the growth drives really year-over-year. that

about As think business again, and impacted more been Europe, significantly the the by COVID Innerwear we in low-teens. sales in were it’s more down

Now was in growth mix. e-commerce, was more the -- traffic and there offset just by but it consumer there’s than been channel lower

Steve Bratspies

And as…

Mitch Ingles

Okay.

Steve Bratspies

did our quarter. coming to visibility that forward. pleased back what learnings terms business what’s put The the in, in and trends October second we forecast Innerwear? on our week Europe But look QX, about outlook good of overall the saw were have announcement and our that rest we back the to for obviously One, of lockdown of October kind in our your And momentum. question what in do go-forward we go-forward factor we already changes this obviously, and to with coming and the we applied of the is going previous part we into

as obviously, rest on So then make quarter. could the we right forecast October, sure good that our the as we close we going in for forward past all of use visibility learnings and to got of the

Scott Lewis

stuff downsizing applying year, were that and those quarter, million. we did that point on fourth same in the to add trends one just roughly Steve, again, saw $XX learnings resulted $XX And for those about early that, as the this we million, we

growth sales in the we that absent growth So would fourth -- have low quarter.

Mitch Ingles

opportunities Great. about that the COVID the part a more strategic of maybe long-term going shakeout induced you and Thank Thanks. following question, is are you. consolidation how assessment? thinking forward And

Steve Bratspies

Yeah.

opportunities of where to understand for strategic we’re us. the tell we looking So at I assessment, -- -- trying kind for and everything you, lie looking we’re are

good has going and to supply model. time We’re our and and cost new built components a really has our and out well different put volume the been worked M&A a taking add evaluating all And strong this the we history business be really of it businesses. it’s of as chain ability to over company through really,

capability potential should and we when M&A And using of we do forward, buy of addition who think pruning leverage think, to thinking want M&A really they -- effectively in look have think we to do buying use over holistically volume. be at I go to be companies we both. I over we As about that time?

future about portfolio, So we’re for then makes going holistically sense actions at finding talk going to be what the out we’ll us the looking in and forward.

Operator

Balsky Our of next question from with Heather comes America. Bank

Your now line open. is

Heather Balsky

Welcome, taking for for you. question. Two Hi. questions Thank you Steve. my

label a do you the you as not as threat? First, thinking a or get competitive marketing private your in category view think on how brands, dollars a if Hanes products perspective of marketing to a threat Innerwear younger competitive question, love I’d second for your and Thanks. it’s And then budget? are consumer increase use and as target you the about your you need to

Steve Bratspies

Sure. Thanks for the question.

on time have you and that and forward. over to spend, ways In stay in we’ve I’m do I thoughtful find I investments to terms going to continue to they threshold that we’re sure met that deserve this met and to to something sure invested hurdle under brands of it’s make marketing And the had and brands. -- think, investing, the we yeah, we’ve think get going have you have are not that

develop probably companies in about sure label, before. the the how that make branded and label threat. at private not is I’ve do private I think private label those both just with in for we’ll I’ve whether not label when consistently to brands to it. and do on be brands, we pick increase, portfolio. best what threat. we my and built a And holistically business, private lean I all is see demographics. continue our the right a across it’s Absolutely, background, The us And a looking So about worked thoughtfully I’ve we but Jumping do I worked think sides challenge it’s of

the So expect drive on good traffic to store. we responsibility retailer think side, takes that compete their about as But to Hanes and to they label feel brands, what a brand. sides. it want private for when our have That’s pretty we on both like

to rise consumers that need they sure we are We relevant. over make So are right seeking they are that are for brand seeking up them demand, time. importance consumers they your out. retail the in innovation -- are got And in the brands in

So we you chain well, the capabilities by able be are doesn’t to pace perspective, the the build brands innovation should innovation and against a private think running that’s at but from from not well is when mean company it and win look private and at purpose the going it’s supply away, retailer, appropriately needed serves we should label. that quality And have well. compete has, the be that right an at able because to positioned for brands are to you label retailer look valued a when build brands, I this very our deliver the compete extremely

Operator

with Laurent next BNP Exane from Paribas. comes question Our Vasilescu

Your line is now open.

Laurent Vasilescu

advertising Yeah. year. you the the much my Steve, very regards Thank on you, around And With thoughts sales for to thank taking expenses, out last all color they of question. for strategic your high morning. X% level shook Good on review.

near-term about as how the forward some over about time? Scott, your other of going here. potentially about do we mid it think of question Hanes growth fueling should you percentage we brands, As Champion, investments a think then, more single-digit advertising, And sales for and in think

the talks XX% I you it improve largely quarter? down I think the selling down -- think fourth the was into ex-mass Champion it to called XX International in that in China. down quarter? we quarter think Should about to around it’s third should your that out in And the also U.S. about FAQ, XX? up should due And actually to due then we assume Champion fourth in

Steve Bratspies

So the personally, I is, roughly that’s too just X%, number is first think, yes, on X%. part you right I around low. Laurent

spending is behind by working on out is about figure brands the just the way, to And right. what not to having behind. plan it’s we’re it trying spend So right the

strong of -- sudden marketing So you’re the not us into to just just going all see money market. market

time do to right now, to, happy but to don’t I number But right I’m we’re not going what very the is over right that the you’ll positioning, working number want across closely right definitely see it I increase as, come right plans, and are. We’re see right where products -- the think on then higher. the I the be sure, being with brand building we behind

have We the right programs.

the message. have We right

We spending be and of have get just the all end exercise. will we we the price are the That to. right process that

the we would through need development brand we’re to all that. do go going to work after work, and increase any So then repositioning ready we do spending we’re to

Scott Lewis

sequential as decline to second sequential the is versus move on -- quarter and on improvement did see which the continue quarter, fourth large the so again Yeah. we quarter the U.S. To see Champion, the your we that we side. address a question XX%, into improvement

improving We about as really product Steve move strong into there. in fourth demand availability have about earlier a the be going mentioned our quarter and remarks. we his It’s that

into we we levels. as beyond about again of fourth as there the spring-summer XXXX that, bookings a our XXXX comparable trends move the of the So quarter end lot positive even talked and above earlier

stabilize for as partner so our things there year. in similar going expecting expanded China, Europe seen the have already again they in move growth, Again, guys and challenges side, from and in there. again we’ve there second we COVID forward story, International we the as this On you some Asia, were are retail But positive to some see Champion. business business

We XXX above this is expected doors year, our add doors. which estimate XXX to of prior

distribution seeing we’re internationally gains well. as So

Steve Bratspies

affected I is add, And Laurent, -- Europe numbers. that the just affect the look we changed Champion, quarter, International at would the if the fourth week this to going

Europe look we pull adjustment restrictions So QX. for our at this we for are made Champion better the in Europe then in based the on of announcement an and back, performance week looking originally

Operator

Ike Fargo. question next Wells with Boruchow Our comes from

Your now line open. is

Unidentified Analyst

PPE also is I you [ph] year? about early for then, the in numbers guess, revenues Thanks delve piggyback question. my a thinking a deeper few Steve, Laurent’s you can how Will welcome. next on and trends margins And strong to next Can have about kind This just taking Hi. into you’re guys on on little for year? just talk Ike just Champion, question, just maybe Innerwear you lapping thoughts of U.S. perhaps the and

Scott Lewis

Yeah.

off I over to with Steve. it PPE So margin will question, turn the start I’ll

a discussed speaking and what to at have to difficult It’s we costs this is last highly product. product are as And by level allocate practice profit individual segments level. they a We is about sales think our so, really PPE, that to quarter. within so units a from margin better information Products think of as margins far intertwined. the don’t spread the had sales really really absorb for lower produce, about helped we’ve cost to the and way the really and that it We a from we year. this fixed perspective it’s really unit similar

Steve Bratspies

we’re dealing the And we’re with right the in Apparel have then we we’re Obviously, seeing for Champion that now. specifically, pleased again, with business. momentum the Sports headwind that

to the get past to seeing quite and good point. We’re the But do the to about you not going about the we feel COVID that, talk of this business, U.S. continues forward we’ll headwinds I’ll XXXX improve expect just well. momentum and we’re in at continue to tell we look brand kind

Operator

question comes B. with Riley. Anderson Susan from Our next

Your now open. line is

Susan Anderson

you the all the taking for on for Thanks details there. thanks I one see morning. Steve business. Good of and question, follow-up guess Hi. how my kind

And It to embarking I about Thanks. the by to there sounds brands lot Champion. you of all global you a talked especially growth? is the that do talking think like be a products. there feel curious I’m expansion or journey. geographies about on brands, opportunity of is existing mainly opportunity guess core if you are You acquisitions driven that’s like the are through across growth-oriented new also, or going in grow then

Steve Bratspies

would the about talking Thanks you initially tell Sure. Thanks. core we’re question. for I growth.

and do we that So we think about the have how grow portfolio it.

As There of well-positioned. I think, we’re I done. said plenty to work before, is be

potential to do. particularly But that and when look I we make I’m Champion, to not need trying we the at that and undertake confident brand. what global in underplay work I’m need excited -- and to of So the the

done platform think something new is can good play, earlier new and a work opportunity some in of of categories. consumer there lot of a brand for And terms I product us perspective we there understanding front getting where big a lot and been us. mentioned the who a in has into that from I is is

our is Our high. by it that -- I as look earlier, said category not at when share, you

the And brand lots Korea with we to so we’re a that and and operating our challenger brand we’re and to LF. opportunities with partnerships way and of there Bell in continue see South China build

seeing indications growth of some opportunities real We’re there. early

strong a in to potential out targeting front So building but have point-of-view innovation. of and going us. of work you’re going to be really have it an enable is to hard we to us more out, we’re going around to But to do. done there think work us, new fabric on women globe, be merchandising to a lot for create for going that’s I build we is opportunity leverage a lot product lot platforms a And see of go the

Susan Anderson

to general, normal category of some take its the half closed. a the think fourth the then, I quarter? is How you I just just lot that in of the kind the continue guess the especially going then had prior in strongest of how rationalization expect much amount And job was since getting we you and past the the think, Innerwear of of lot you I And to how a as growth now is restocking, XXXX. replenishment? guess, over half was guess, much it had down in first Do the couple to year? healthier in was first of obviously, do it this, obviously, the nice had what there on think, And doors then years, of seen growth, back you’re we there, rationalization Great. given do versus through year feeling I core about I think COVID, really of

Steve Bratspies

Sure.

expect quarter, retailer inventory not still would you be fourth that, it as there be terms QX. In It as is restocking. much of in to I tell I will

POS for But we see a QX. that do sales So that we to high continue. year-over-year expect posted QX, strong momentum we won’t XX.X% our growth that in

So into that QX I I see sorry, changing. out and QX, into think that’ll and play don’t, don’t I

still there. understanding and some as strength, from that and some still already of but guidance, restocking, I less our see said, October positive our can got So, business we’ve POS we

big growth athleisure In different the trends are U.S. categories. business that terms growth. are overall time, things categories think the demand more over products. are categories of category the for you’re not time and over There than, seeing very But time. healthy high over we’re driving stable overall, overall, These categories seeing I that Innerwear in and they’re are are

So trend, in tends fewer I where you is to the market be where we’re the think Unlike with operate to doors, momentum and in market. differently. positioned we’re really the strong the have where

But see inside continue So flat. be think I you’ll share good because forward. I gain to is solid. total, per the in our it’s think category a the going business And a category position capita to and is relatively solid going

and So I remain the we’re healthy positioned think over like I will category time. where

Operator

Suisse. Michael from Credit comes question with next Binetti Our

now is open. line Your

Michael Binetti

Steve, my with to congrats confused new guys. chat -- just want Champion bit. a I’m a welcome little I to to little and the volatility you. add the understand me want on let here. by Hi, I role. Nice

come we is June, company that last pretty decline XX% May, also positive call, spring-summer wouldn’t commented college XX% being then into sports by to that numbers? I the comes POS XXXX, Apparel order I then positive know this Sports in meaningfully on XX% up book July back in to commented the in bigger. the need the think the business for quarter? and play But you see on bookstore support up strongly business

Steve Bratspies

encouraged give about mean, we the dealing spring. I to know. a XXXX, we’re we’re rebound rebound bookings get weather pretty up past to think rebound, It the seeing and and that’s as We COVID around need business going have think the is of to this. we for Apparel numbers that we Well, we’re rebound going will by that the Sports momentum once globe. not lot -- upon we’re with. quickly. business that Yes, seeing. we that’s But I this, the we are like just don’t it with by things depends But everyone

over channel good really really, responding Apparel, through individual on, the actively that we’re pushing So shuts down the we’re the product for demand seeing businesses like we’re and time. we’re in that are an pull have seeing But and and Sports If demand. that. pull-through running to we’ll manage

Michael Binetti

Okay.

the a Let hat the take looks is And around on do of initial make. me this a lot you could biggest What you some commentary business a theme put brand, then your that meaningful think we’ve do think as business few is theme changes years the you community an your here, there customer capitalize brand. you last financial appropriate just about the margins. follow with, think on opportunities you that like I missed on when your over industry last higher big assessment that the business, for early think then quickly? assessment, were can this any from you Is can but plan? look job, mean your you were this when the to of at a when well? And seen you we the do think smaller of

Steve Bratspies

reverse So let in order. me take them

Michael Binetti

Sure.

Steve Bratspies

commit last part, a we margins. small to the wouldn’t I higher had business,

to on think of the we’re in assessment where our be. still we’re middle want we I --

common The us kind that we are. first around was getting back base part we all and know to of it of where

make say, we’re building the to We that’s so same -- but like we need far. and been to roadmap, sure place from I’d are assessment all starting we’re a

higher that with going yet margin to wouldn’t I So small that be going that to model. get we’re conclusion to we’re follow

that decided haven’t yet. on We

or see you forward. update are XXX% of of look actions and to clarity that go-forward and quarter on are in start our you playing go will point, start this, see in certainly terms you will at we of report you we’ll In continue and we to And strategy it QX fourth our not going may models when to in when more may we some certainly, give to the but direction we our the where out like, we’ll give terms that be at what point. more we’ll as

said these do I general the they and But at my need brands and we looking earlier, out think themselves I behind necessarily pushing. There’s In and brands things of people need that of with think, to there. to lots to invest, terms of as would continue could to continue today there lots I role. previous say, have challenger invest done. to I nothing brands is are

consumer. share compete to need You the for voice of with

simplification, So I you There the lot invest a the categories, think these them I of say shop is is would go are complexity. would to portfolio continuing at shelf. try I something to brands do. in complicated that to

to of the So a right simplify, consumer for but I the lots and core now. brands reach is set a of the continue consumer being in lean simplify reactive think businesses. responsive incredibly And behind different ability challenge and of and broad customers, pace speed to moving at

us an forward. it’s for think opportunity going I

a things just grounded on my across past some are more in, are the of but obviously broadly those market. mind that So in experience, looking coming couple

are I for think opportunities us. those some

T.C. Robillard

of more our doing talked book, layer I other environment my going right, timing peers say, That’s Apparel, be in that’s about Michael. our part of up -- might had last lot Hey, bookings up And that, over them where a question So some Sports right? of mask, book to to about that’s mean Sports of our take and of terms those we sorry, say remember order XXXX, part considering a DXC right, spring-summer. going I to would the that’s college of talking I the over right? to your help for wholesale be that not not because spring-summer want in when that’s kind The a PPE would in account that XXXX, back I would of I fall, into big order add stuff that’s when being place that that it going is the business. to good any to bookstore, come your think the here, kind through you’re just thing to think on part you of in T.C. is the that, of that pretty the and about is. big Apparel, be in for are This with you’re in last lot are that coming talking original this is you just and -- through I a you

done. of you So has why with might that that some help Apparel Sports

but so, a didn’t wanted kind I point to kind around, And mean of of put that. come back to just to

Operator

question from Sole Our comes Jay UBS. with next

open. now is line Your

Jay Sole

great thanks so you Steve, far. for much, color Thank so Great. all today and the

want questions as sounds on you ask in about the -- you to review, like how you go business of this But about think you other different have there’s it Some balancing way. because I -- if through touched investment, a balancing do a lot in to do of sort in-depth you improving great near-term things investing product different and of in desire growth? you want that kind against think and innovation systems of terms lot and that earnings show a and product you How of the to areas? of this, do marketing about

Steve Bratspies

Yeah. and the Thanks lot. use a think When that about we word we for investment question.

may as horizon investments plan. very I technology. we’re here behind. be a of will different some need that Our be about we up the you about make of I -- what think do that things these going right? focused do long-term and to to in think need to we provide be that I driving put investment, talked we and should and we’re growth to how working muscle for to the success unlocks, on talking setting changes And modernizing as when thoughtful on about And But should earlier we we’re of going that think and lot opportunities. thinking how them get We’re targeted multiyear company make. and we

to we do flexibility I in business it’s model to around at have really built chain it. But flex It supply key challenging our How it now make we in forward? I the its do ability think one we it as build successful sure was understanding and on incredibly out of our look all businesses going as that we’re DXC some we we doing align its how make supports extent. our think and to different parts go and world. proven forward right to

looking do program do and looking, ramped not cost targeted we’re going and we’re don’t and want thoughtful think Underneath about -- be the transformation we’re is, same to So it. be I the don’t going investment really that you with is at we doing a we’re at to --what that. to But how starting I thoughtful time.

that are savings we to ways and are of Some growth will present of and cost cost that opportunities. into working different short-term more to fuel initiatives are of inside longer-term that restructuring putting of some these cost mobilized these some are some kind initiatives short-term thinking efforts about

aggressive we So can we as side we’re to we today on going and the much obviously of we’ll it we be and for as the are understand as as cost balance operate greater fund But on as are. and you investment out of side certainly into how we the go need go a to details what that look we going performance and two we’re forward. quarter-over-quarter forward as give the the

Jay Sole

more And could. maybe I it. if then one Got

private and the with brands the have Target, about retail places the the and advantages contact in do within positioning label. landscape. think like brands are advantages and comes What the company the within feel you those that you to how versus compete the about relative do their company’s brands Walmart other across against against competitors? and portfolio that But and national talked You

Steve Bratspies

Sure.

biggest compared think, of the the I mean, direct one I had some to comparisons [ph].

acceptance equity and our position. and we think stronger have I stronger consumer

and can that pipeline innovation have better innovation think I better bring. history we we

-- I closely. think well. the think our I’d shelf basis we’re very think do a I site-by-site on with in well-positioned. So quite I price But we we’re managing like position retailers

Operator

next Lejuez Our Paul comes with from question the of line Citi.

is line Your open. now

Paul Lejuez

curious your rest online? not what right Thanks work Steve. at customer relative your back they categories do facility, manufacturing And you base can at at customer are the Thanks. then separately, about do now, running just them for how of Hey. talk expect that XXX%? looks welcome, about they they’re online what When guys what am am I your buying, and capacity to I XXX%. curious are you you customer, better and

Steve Bratspies

and in a kind them people from making Other separate reverse. than take From running sure capacity, of kind will COVID things perspective. day-to-day like a of we’re operating that. I Sure. we

in running pretty We’re and back our up network. much full

problem a today. for not that’s So us

this of we’re and that very are tell differently. going seeking our as trying space, new brand channels But the platforms to in. which balance as particularly play I in if honest we we and be heavily. will online a good that brands come looking terms you. would you still response look evolving online, in In business, you young in are products customers it’s with we decide in Champion once And work particularly to and And of which and there’s to product lean

where well Our smaller traditional partner other way. more Intimate extremely retailers, the of our products tend in they go to basic skew some do to tend third-party on find the to brands that

forward a we customers really for partners to us make are for choices shape think, we continue So looking well. build that the third-party news over our have online. ability our business purposeful presence own I there, in to time. the We go both is, online in as But as brands, they out good need to and our great and can online

Operator

with Duffy Jim Stifel. from comes question next Our

is now line open. Your

Peter McGoldrick

for Steve. my welcome McGoldrick questions, Thanks Peter is This taking on Hi. Jim. for and

and inventory the category how early in review this are penetration, any share strategic the the on Within of there assessment say should evolve reads over medium-term.

Steve Bratspies

Yeah.

Hanes lot our brands the brand mentioned where growth I core we positioned demographic. is lot I of and and our by industry. is where be a good who the about our both think example a the lot we’re would customer is a one the of where in earlier we around learning demographics And are channel, a learned skew and that, by

in, and them challenge it’s insight going consumer it new opens I So opportunities But a younger brands not but not that go make aligned that’s and target the Hanesbrands. forward. to we that host go great in marketing whole now. to versus art and for we base attract to growth And bring us that current we is are our to have a particularly the perfectly that -- wouldn’t the through. and consumers doing lose younger, opportunity to for say right up and pivot have of that part, in we we’re that covered new Art

Peter McGoldrick

the set, think from And sell-through and in has both going business then level do the Intimate which Innerwear sustainably. the foundation you with grow seeing are right within Okay. specifically, we domestic sell-in to direction

Steve Bratspies

Yeah.

the business Intimate the saw think to improve. in up it double it XX% was we It digits up bars and I third -- continues quarter. was in was

business, business a with shapewear, lot that. pleased imagine, The as that and you are we So those can aren’t special of the right challenge now occasion right now. of occasions happening

challenge. of a make shape an that’s some that to of working So bit to new inside a more of teams everyday do business trying on But that. to the product even pivot and innovations

gains So in seen we’ve our space some business.

has question that I think to I your begun directly. to answer think Yes, business stabilize.

of But short-terms I up there is some bit downs. and little think a have We momentum.

go We that working to we’re through long-term a for viable will very business we have manage to us. make as But hard that.

Operator

comes next William Bank with from Our question America. Reuter of

open. now mute. on your be line may line William Your is

Unidentified Analyst

taking [ph] Mary is for This on questions. Thanks our for Bill. Hi.

is being how in U.S. that your the what and first, done off to in channel? So, it’s exposure channel price

Steve Bratspies

we price, percentage through is jumped head. not can today think our business I we strategy you, as very. -- know I and our don’t exact strategies, don’t out think Off we small the brand I through exposure honestly exact we think It’s tell not my know channel something about of our a and consider there. the very as obviously, number, that’s that we but it. big. But it’s think have

Unidentified Analyst

Got prior this it. talking to that are leverage leverage and are given is And normalize or preclude then that from above with that M&A you target, that you reaching something opportunistic considering to your you target?

Steve Bratspies

said, and core been would I time is down would of acquisitions do support at the number one, our two continue target. right what the we business Scott plan to not and priorities dividend. say right through would to we’re first, try now, our are and and has focused and out our this leverage invest is as core work get Those priority over But to thinking there be number under right third the point. M&A, our be will acquisitions right on that very now, now which X,

Operator

question next from Our with Carla JPMorgan. Casella comes

line is open. Your now

Carla Casella

increase a is make in and the a you wondering I There biggest My on I’m give questions, big of But accrued question -- have of that’s through some liabilities could I’m have two payments? to the increase timing that capital. of working for is deferrals COVID. assuming one is if when drivers sense us the Hi. and you’ll

Steve Bratspies

the that, Again by of course kind reducing focus absorbed, actually Yes. includes abatements entered that, to is are but Thanks crisis, COVID number caused point where on from of leases significant. but where for negotiating landlords and working we at a and agreements, also nothing individually as things question. conservatively trying like with is And stores our we’re of that we’re into this we of liabilities still of kind based for things a that. some cash deferring, the that lot emerging right, the were things items, expenditures, accruing the royalty a your accrued

Some XXXX. the reducing in taxes has of some quarter stimulus sometimes to there one, sometimes and but time costs is world some this cost, across the it cases where fourth and packages deferring been in into

nothing factors, a it’s significant. So number of individually

Carla Casella

XQ? ‘XX. be sounds may It we in of the some pay like there Okay. so majority in But catch-up

Steve Bratspies

you will a of be but give will two. a I the be two. can’t combination a combination It of really the number of it specific,

Carla Casella

a And I the have Okay. mentioned the or margin, on shift And margin the it broken of then much businesses, you question highest typically shapewear, shift? businesses what is affecting Champion because my the guess, front, are driver it’s of is, margin that business the pressured business? how a second college mix on out that your you that mix were

Steve Bratspies

part then Scott the a margin. little take will me about talk let I first let So bit

and drives pretty view are they very lot understand a the actually and Champion a and consumer is importantly who Champion are demographic because really from who have that Champion behavior. a good a customer is perspective, on We is of psychographic

about is, consumer on the kind the is And business. two people consumers high But demographic college Champion, some the is demographic college is are that quite of business piece very accounts that ways of around bookstore age of there campus college actual -- of to think is huge that not a the that large. of it,

Scott Lewis

about mix a just margin and volume as naturally about roughly quarter-to-quarter of ebb again and was again, the business another rest largest flow question, And headwinds And just margin and gross we’re then within QX, mix seeing sticking piece, kind I’d lower business. the the is one and of piece just a is quarter, the evolve. think bit the as next those of into it gross a will mix Yes. deleverage fourth the say, product few little think within Sports and of in the manufacturing the Apparel Activewear from in to and of variances of them Champion the you so categories the specifically and being between again, it’s move in mix just It it. actually half

Steve Bratspies

total year. when all Apparel That’s back add roughly business, million business a just me not our think let about little be Sports you And $XXX Champion. and this would Sports over our Apparel

So that other not fully business is there’s Champion, well. that bookstore as in business parts

Operator

turn showing the remarks. this questions to Robillard for further time. at to I’m in T.C. closing no queue I’d like back call

T.C. Robillard

Great. day. Thank everyone appreciate call attending the you. We a today and have great

Operator

concludes for this participating. today’s you call. Ladies and gentlemen, conference Thank

disconnect. now may You

Hanesbrands (HBI) 5 Nov 202020 Q3 Earnings call transcript