HBI - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Hanesbrands' Fourth Quarter 2020 Earnings Conference Call. At this time, all participant lines are in listen-only mode. [Operator Instructions] After the 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

T.C. Robillard

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

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

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

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

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

Steve Bratspies

Thank especially how under conversation made proud topics. safety provide today challenging I'm call. We're two with our you has on the year, to such the team since over service. last center going on focus we've hope and everyone, and your has and safe to by you, hard it and the its thanking begin pandemic the T.C. To dedication, a healthy. began, morning the you believe It's since staying hard Hanesbrands year the accomplished progress speak extremely main of update and for circumstances. work past to the been and world ongoing welcome. the I team end, around are families excited that Good I'm to an want entire much to I on

quarter, in drove the that our to strong and financial finish the the First, fourth a execution results year.

as plan, outlined multiyear of we're assessment, the growth being full Second, quarter. I our strategic developed is a that's calling launch strategy, which last our potential

which brands share, above U.S. flow, consumer and experienced in profit, environment. including for despite world, of as Basics all and share demand We U.S. categories, drove and cash First, gains strong quarter, of operating Intimates. the in we came in unpredictable the a the per market number terms fourth revenue, expectations, our solid results our delivered increasingly products earnings around operating

in continue sales Innerwear across currency revenue in with year. largest of excluding We basis also college the over above-category prior with to In increased a global champion PPE, the businesses. build sales of quarter. outside International, our X% business along over In momentum currency over with of our increasing And business, also year. during Champion up sports Champion's increased delivered performance, prior XX% constant COVID-challenged quarter. U.S. three XX% XX% growth, global We're sales, licensing the saw and the our On year. sales Australian prior another global the constant pleased strong Innerwear, were quarter performance brand we

progress It second was future began We've to implement identified our turning and us productivity. we needed rationalization. faster, drivers. defined that the Since like to costs, briefly Specific the we the Now we've SKU growth. our both it will growth to the strategy. growth business last resources. will unlock lower is initiated focus to that on early It it Full these. include clear I'd we've Potential plan few topic, initiatives and actions improve to significant make And and of streamlining our growth as simplification months touch will the plan. over Full on of the critical we've our strategic of past portfolio our began our implementation analysis Potential call, made from

our increase and First, future business improve to returns. portfolio we're our streamlining focus

alternatives our strategic European Specifically, exploring Innerwear business. we're for

world. While around on early process. updates and move to provide we we're the rolling see we to that are through transparent, PPE. It's moving vaccines will stages, also as very in encouraging COVID We're from the out being the committed are

with sales not growth future a as PPE view of reduced this dramatically offerings Therefore, opportunities. and have flood opportunity a As orders along our rollout, company. the future competitive slowing a we do for result, retail

on call, discussed business XX% rationalizing taken streamline turn last improve costs, that the The drive lower our second we've our Based SKUs. margin in-stocks, which also action higher removing product inventory to our heighten as This process. and our while offerings, well as design and higher will consumer simplify a volume, sales review should implementing formal in our product focus, management product of we SKUs, our on we're SKUs. of is lifecycle

a result difficult well down financial SKU provide as the As to our will detail the important this balance, to during results. but these rationalization. entire actions, Scott write on inventory decision review our our more we've as PPE tied made inventory-related of his of

levels last consistent I mentioned growth over delivering generates consumer-centric higher profitability while quarter, to one of also revenue As and our become that a is goal higher time. more company, growth

blueprint Full plan is Our accomplish Potential goal. to the this

see, our Potential We've we shortly, are details can a the over focused call look action, first to urgency. and purpose with taken and sharing will our more I to this you first, guidance. already As and I forward on review we're forward results moving but quarter about our Full Scott? for of plan. with turn Scott executing

Scott Lewis

of the Steve. we our all Overall, delivered fourth results. driven end top expectations key Thanks, Hanesbrands by solid across exceeded high adjusted line continued an of metrics, quarter basis, our On momentum.

quarter to X% billion. Looking prior details $X.X results, year sales increased of at the fourth over our

Excluding X% Innerwear, Activewear, as experienced continued improvement PPE, increased segments. sales we and sequential nearly International in our

due For gross growth, above basis contributed expectations and the was mix. to XXX the quarter sales higher of Adjusted margin, product XXX the FX quarter, our and XXrd XX%, respectively. points for of week in

vast operating expected as plan higher margin sales and to and higher points majority Full Pretax business the mix. along XX Breaking balance down, is tied margin margin simplification and mix. actions $XXX gross that over $XXX Potential from our in related basis XX%, points offset to year, million restructuring gross which sales with related prior than offset million, these decline entire to cost benefits expected mentioned, COVID PPE the Full on quarter's $XXX more higher Steve million variances, we non-cash. of year, favorable call. declined the approximately Potential last costs, of we to the and charges the were product compared implementing to to inventory-related as due declined began inventory-related Adjusted to referred by were charges quarter, basis this manufacturing negative The last plan. which tied were As XX% XXX partially the were our

approximately of quarter of $XX related for reduction non The year. in of million inventory business, $XX U.S. fourth our and the asset COVID-related a accelerated acquisition, discrete chain end actions charges at SKU well our reflect PPE balance represented the as million The Bras remaining XX% million the other $XX is million the the N tied supply goodwill $XXX initiative, restructuring. for of from tax to Things write-off impairment as of disclosed a our hosiery previously and business our $X million to

$X.XX was quarter. a And a our benefits, Our GAAP which loss adjusted profit in while excludes was above to per $X.XX, basis were a the earnings expectations of $XX XX%. tax per of million tax share This on had share. adjusted higher-than-expected one-time we rate, due

you take our through met let performance. segment Now,

over XX% and driven increased $XX XX% increase intimates, in inclusion the an basics, quarter, For an Innerwear sales the U.S. X% of million year, by of revenue. PPE prior in increase

shapewears increased prior we inventory basics decline business, a sales by over product sales experienced year, within underwear, Innerwear consumer each by gains, U.S. retailers, in XX% increased rate, continued growth in PPE, driven business, bra offset week. And sale, COVID-driven at In the than sales. which the XXrd intimates of double-digit kids' and demand from point restocking our category. and space at a contribution our Excluding strong more

benefits which year, Innerwear's from by by operating were sales quarter, driven the prior mix. costs XX.X%, points over distribution declined offset to basis XX primarily For the and margin higher higher partially

revenue Activewear, in compared X% channels. year, increased growth the to U.S. last by wholesale Turning online to distributor and driven

prior declined saw quarter. sporting and college in While continued licensing business revenue the sports to over improvement in due at fourth sequential limited trend our events, year-over-year year and attendance its we closures campus

the over Activewear's our Champion at reporting increased Champion margin X.X% quarter. Looking was operating Activewear fourth channels the the XX% segment, year. sales in all brand across last in

our compared the declined revenue and manufacturing last which mix. to from Activewear's to to offset were year. X% expected, benefits expected year negative segment, variances Switching partially International by As prior to compared due higher increased margin the sales

sales, the by Australian basis, and constant prior million Bonds the driven N and sales And $X over reporting increased wholesale, X%. segment, channels. PPE Excluding a to Champion On X%. Bras growth International respect increased declined revenue within the brand experienced our international We sales retail, brands X% Things currency across international our year. with of in online

We also America. saw Canada growth in Latin and

offset Europe. and growth declines was driven this in COVID Asia than by more However,

variances, the to guidance expected million $XXX For which of COVID manufacturing the operating XXX cash quarter, international due over flow, exceeded XX.X% expenses million year in mix. declined our to negative full-year. generated and cash flow we segment's and quarter, $XXX operating From the the prior for basis margin points

a balance X.X for the document this have plan of benefit, as last which consumer times turning guidance currency guidance this of our X.X guidance environment. May. foreign our I in targets sheet, the the point Day sequentially. times are Investor by expect the million our now to part at guidance, continue was of and previously At With details. sales year. first a financial a on as full-year leverage at we sales to at Adjusting plan basis currency we the quarter we debt to outlook. created Looking to total we first excluding X% FAQ basis. At respect three-year a on And full pandemic compares reflected for at XX% discussed, XX% our approximately of for growth And write-downs constant the And to inventory the as adjusted uncertainty declined providing actions quarter, the net impact in our $XX expect upcoming well detail the to prior growth the end XXXX the the provide of midpoint global EBITDA of review implies midpoint, press for of COVID-XX quarter. and additional you potential to We year. to the release outlook time, end

higher implies We XX.X%. expect variance, $XXX of of year's manufacturing expansion COVID and driven anniversary at $XXX midpoint year-over-year margin sales, the margin to due of profit is to de-leverage. last Expected an the operating volume operating adjusted positive which million,

for per of adjusted million earnings share $X.XX. interest expect XX%. $X.XX and a and tax other $XX is We And and both expense guidance approximately to GAAP our rate of

call momentum the to strong deliver our So in believe well of quarter with over And Steve. positioned the we continued that, back I'll business, delivered closing, across the we with XXXX. to are to results. are seeing growth in first we quarter turn fourth And we

Steve Bratspies

Thank you, Scott.

few our our about build positioning on to we excited company ability the our some on XXXX are a additional full would also minutes in in future. success. I now momentum long-term potential We to for our are confident while providing like spend business plan. And details

confidence more developed For efficient outlined growth call pillars HanesBrands in we the defined been model. the plan, a has that as identified have to reinforced and strategy. of our last and growth only four the we business our strengths have growth My I create productive unlock and initiatives on quarter's this of

We have iconic brands.

breath We supply have and chain global scale.

have solid sheet. We balance a

longstanding brands are a are of team and innerwear This to full consumers. respect appetite driving defines they four our making with for a a developing to for products growth passionate Drive geographies, and streamline first, consumer brand briefly that our of readiness each our Touching ecomm excellence to sustainability. plan; growth with with in distribution. grow our global capturing have appeal have We segments, globally. Build channels. dedicated of and strategy portfolio. product younger progress growth rapid change. And, global we strong Champion channels that pillars shareholder genuine And, Champion potential on to we offering, these, leverage commitment opportunities With value. is foundation our a and

in on Champion going We're forward. significant opportunity consumers the momentum And with engaging see business. have thoughtful directly being years. we the next digital we brand to grow platforms. We solid are the position We this three-four how over through

are innovative we products. on greater are our and through well kids expanding and outerwear as stores category We strategy, to casual online. focus front-end and footwear. as deliver with global expansion in athletic We're women's partners China leveraging integrated And an centers our design layered standalone including

In current by younger DXC build recent on pillar our Australia, innerwear. N in our to brands, second get and must U.S., shifting base momentum innerwear growing our while defending maintain built the is of consumers. portfolio our Our by our growth while younger growth our we with We to through is Bras adding quarter. fueling U.S. consumers have plan growth Things our Bonds younger of channels. the strength particularly the our In

plan innovative Bali products. unique by We our Maidenform, reach are consumer invest incredible lifestyles more with Hanes, to changing well-positioned this We to brand growth to portfolio and to meet capture of targeting opportunity and groups. targeted

long-term great buy on online it's adapting building to we sites e-comm we're We're to build serve products, and across way loyalty. brands rapidly to our performance as a channels. shop. e-comm To successful products get our all be products. consumers retail receive analytics digital Third, with consumers time, leveraging must connect to excellence are however our they capabilities tools over data buy Consumers our to and know our developing shopping our so experience build our help improving better consumers sites. online, frictionless We're find can we're and or easily and consumers own marketing, partner whether a our

to and portfolio us for will global our streamlining we're positioning and Finally, growth. This efforts our resources growth, businesses. focus higher on margin allow higher

a cost our mentioned for Innerwear. create on exploring and from that me to and the overview our other PPE strategic components strategic more initiatives let substantially growth the schedule. team, self-fund savings turn own of growth its to today. not run investments. we're to including XX I and identified number multi-year strategic we're a investments We've European productive and each executing a earlier, all moving intended the key tactical Setting leader, these, with these With program alternatives deliverable of our business plan. As making on KPIs opportunities, I'm begun unlock efficient and already model. We've initiatives going of Well, initiatives through to

provide product Let coming high and be more some consumer level focus. We'll me thoughts.

technology and brand at in we'll across to chain channel chain, and consumer supply and standardization enablers technology and of full our And and will our We're data can modernizing our optimization serve number technology. discipline heritage of innovation accessibility and for into optimizing extend key efficient potential a we make beyond cost sustainability our the our revenue marketing. management, more We elevate the design terms are We're our in of both We're making supply investing so customers. organization. our and through initiatives we're with product us tools global management. segmenting data plan. in brands will lead and Data and better our

supply company. of strength and a the Our it's competitive advantage, is standing been long chain

service will also innerwear consumer. revenue us activewear And This build organization full us and restructured and focus leaders, talent President activewear base. and supply decision-making, structure. to the of to designed our our and Given Consumer of for leverage meet be number future our deliver Segmenting ourselves costs. our supply enhancing align We're environment that changing and Innerwear. innerwear customers meet we're needs and drive We're particularly respective and and opportunities, and designing capabilities to allows goals new and while demands critical brands our chain added provide broad to diversified tenured portfolio expertise leadership. help of innovation, a deliver components to culture. transforming businesses. new chain to greater supply of long should And overtime, market responsive in chain We've of CHRO, quicker on to the the to We've build growth opportunities potential to of our up bringing a functions, capabilities also are and the unleash outstanding powerhouse digital Chief world. our and innovation, most global plant, of our our this to reorganized improve our and consumers around existing lowering we're products, efficiently flatter to a which alignment including the and changing and within efficiency, leverage and adapt of Global speed knowledge growth a organization all expertise around Officer, our global recently IT more winning

also our And confidence long-term quarter business while and efforts performance. us closing, momentum higher your like entire to in company T.C. progress these with looking quarter. our about in forward plan success. we the in drive I'd to potential turn business, was And to times. This about a Investor made profitability. the Hanesbrands that to continues full And growth gives May build our Day. world discussion growth thank the which implementing in our all that, can strategy long-term in-depth across we've build positioning our begun over challenging fourth we're up, for the We're sum we in for the to Revenue to the again momentum our So evident at XXXX strong team excited more around once I'll call

T.C. Robillard

the the as we'll turn time That your concludes the We'll Thanks, question-and-answer Operator? session. operator taking questions begin to Steve. prepared now to our I'll back remarks. continue allows. over begin and call

Operator

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

Omar Saad

that, Thank Good my I thanks question. around quarter. guess, as are behind of be, you some brand? number the thoughts the the the morning. review, of some could you around -- comprehensive maybe taking behind think about would the findings you key behind Nice some findings share laying of findings for during for question that the Steven, plan, Full and Potential initial details my plan, -- out the Champion especially and Thanks. the

Steve Bratspies

for Sure. to And first it, real mix basis. we are comprehensive looked back Thanks chain at everything. channel question, who we we call. is really view. are assess day, customers, market, appreciate the a the on on August, how go the and what's the a look We in did my and looked global really When business our supply at you our we how key at our being how positioned, brands started, to performing,

of thought, you call do that, learn what things look big comprehensive you're And truth kind than things upon. you about unvarnished you opportunities every took our underneath have course, business, time at initially very that you we to the really and improve to got things So we your of a better some business.

all right looked strategy built came the that. that, we out of we So at and that

learned brand that that's when the seeing behind incredible in I Champion, think this an And how And much or you if company - to the a its about call, innovation, strong has. one I reasons what got it is growing is I potential the think strong learned there's is footprint record the continuing really So, really brand, really from how what we heritage. it's excitement got it's so I because global and and it's much lot of brand as you -- about think the is last there track XXX-year-old of of the joined We're a grow. brand. a said opportunity

the to So foundation it's build upon. future strong, upside is into, we to lean the to an good. And in the and need continue we really area is think I need really and

our The area say, it's growth its And U.S. inconsistent the the terms that's other the very business. our different And large of younger, differently, that as really where are, to our business, older. the of a little couple part is coming looking And would brands understanding years. really last profitable part a business. we category is And in younger a tending we it's brands, looked in for a key been Innerwear is a SKU what at we of business growth I products. are obviously learned of consumers growth, over the shopping lot

our portfolio, have. at I looking love that So, the we brand brands and

to go a how as segment base clear Hanes massive as segment brand, larger each that a spend for particular we targeting, lot right I to consumer brand to forward. and And expand opportunity very we very think being do is have it's bit and clear time about now, reason of thinking grow a going in the capture we're a a underleveraged we that. have consumer has

you, example XX U.S., Look the age Just very in in but give XX share group, over the at the underwear position learned, we position number thing getting is one the have group, share we different. I'll share very age in we the a granular. Hanes men's the business also one and that number actual under the

share, more lot share coming a have is the in growth the under absolute in over XX, the We XX. and

had capture opportunity. are to to that a very that and be us shopping, focused will us And products on how bit that they better, that coming they're that what for very enable little And going pipeline have want. opportunity after that going big the a to understand as that saw we soon So consumer. targeted consumer products some we're in

job I would our that other good didn't are I we that a consumer. that learnings of leveraging was had say enough we were global the our think One behind learnings doing brands key

our it men's tie years that a just exercise Australian bit different back then that through very consumers ago. with pivoted, younger They a brand, aging particularly Bonds you, positioning, to a couple business, the product just a So a given had I've brand gone themselves underwear example are time. extremely of found different -- and and doing capturing little now bit, offering over well similar different

lot a we inside there's and So learning upon. company upon of can improve build global that this

of one connection points as we that's forward. the So that we're trying to go make

couple a key just that that taking into directly So, actions forward. tie of the learnings we're going

Omar Saad

that's super Got strategic then the And guys one a quarter? excellence channels. know this digital and provide follow-up, the quick it, for e-commerce it's of priorities helpful. I Thanks. did across you metrics building e-commerce

Steve Bratspies

talk little let Sure. from our, business. where well bit in We just release, we me call a didn't our it, consumer-directed but about are

an of grew from quarter online XX%. So basis, it's our about in XX% the sales

our in the over with that with And that business own third of party sales and was both with So the our pleased our we're performance suppliers year. pretty site. personal

So, in of continue business. momentum priorities. see online strategic Work be there, done the one our it's to to

good, momentum get think seeing there. But and a to great, the and need we can consumer us, I continues to find better. that. improve we we lot upon We're not keep

Operator

Our Paul next Lejuez question comes Citigroup. with from

Paul Lejuez

about just follow-up bit understand to there. e-com you give little I company-owned Omar's on the it question business, on to third-party just was curious more sites, a could, the the if SKU on those excluding I could metrics wanted if thanks. piece the reduction. you And Hey, of

you XX% help there? I the the any inventory. percent we from more happening more does on think of XX% side, and if brand, represent, is that you Innerwear of SKUs, What that said Thanks. see won't sales Champion provide the what on of the side, could and

Steve Bratspies

Sure.

we to me of a a things take about quarter to you're did. the it's context me what business. hear around think fourth theme plan our the and understand the Let a important we perspective, that is order, is I is initial online. let kickoff, Full number in SKU lot. to And took of from that's actions Scott the the activity part simplify And talk kind of we in of them one did From a Potential reverse why a going little simplify really bit

whether I a for be in-stock, in it's create focus increase shelf. that provide that's means costs, better at to costs able the whether lower critical ultimately, better think that's really resources. experience, to better products, speed, and whether our with And our us also, consumers that's

now on -- And So, It SKU the step of went action to that don't And of From in get that think for SKU is this room you about it's focus reduce, can't to to things, you're what-are-going-to-see, When or so this. the end for newer hope year our going but consumer get other necessarily we Brand notice rationalization, that on. can't we they Product not at they the simplification. is about rationalization of we're XX% And it XX% is the be Y. is about don't that growth. forward. inventory I SKUs create we a think disappointed of in took initiative it's it's a that intent, drive key that. their see was also One, don't you who that's kind you as going can anything, a to actually I I X pruning. -- that areas

we areas SKU us three sense disciplined for you. still SKU out, where XX% But grow. our I approach very it the a adding makes would into business took while bucket to take reduction. to for to we're of it SKUs So, our we

recent some, broken complexity call, be there's we relatively Others all. that season cleanup so them customers, to could what confident that no some and replenish in labels third area can of really over that just is some product. to version maybe are where of configurations regrets, wanted clean are is kind inventory we downstream packaging amount of into unnecessary that the is at irregular, needed you small businesses inventory, -- we're for some businesses, really it of past shouldn't routine done, kind sub-brands legacy we SKUs of or the to have more or certain see a up. And small Some a be that move amount time I are that declining that merchandise would small continuing

approach. So, took a activity. a global This we was very disciplined

were looking over us and followed to allow see growth it XX%. this don't intend businesses in involved. But We rigorous accelerate got actually our our of to All and to go, us now I'm move missing for at margins system, and this." faster, improve We "Oh, the to manner maybe a you very to us in I it that time.

consumer it So, should be from seamless perspective. a

Scott Lewis

for question, question other this. To on your and your thanks

I'm XX% question -- the year, It to of, adapt. as well, consumer we of behaviors So as seeing the versus behaviors, growth an your sales of there. online, far shopping online, amount last are change clearing and as we growth XX% as the make about was so incredible adjusting sure

the Potential opportunity And lot of online. a that e-commerce as so is another as this there's with and area we far Full plan, know

to forward. into And so we as move even we we're invest going for more as capabilities look have as that grow to opportunity more really an this we

Steve Bratspies

are feel they going us the our are I online add just would get that owned about to can total of XX% Web you how important opportunity that so sales, for present sites and for they And our forward. us a Yes. of kind

Operator

question Buckley with comes of America. from next Our Bank David

David Buckley

my in XXXX? And believe level business? can size earnings the taking details thanks first to given Thank on good the guide, share details quarter we return but margin more of and fiscal will morning, you. can for the you then Hi, do in Innerwear you profile know you I question. 'XX any European just hear May,

Scott Lewis

So, me your and question. I appreciate start let off,

time. we're mentioned an as at outlook not giving in far and remarks, our this guidance the As we XXXX, as XXXX full prepared or

and through the Day. are that working forward and Potential developing our we look We in May plan, to fully Investor Full addressing still

quarter the we as and continue profit quarter, there think far. we that we're a from so, And first And saw top-line a we're we the feel really as costs January from think we're across SG&A encouraged to looking within continue that momentum momentum SG&A. really margin the the good P&L going substantial we've seen about the about for into And so -- the as margin that of leverage our able about we again really the a on accretion standpoint, and segments. down spending growth first pretty based gross fixed in seeing we what both about to have perspective, business all we're

Steve Bratspies

agree with Scott. And I that,

the seeing feel heading business into we're XXXX. and momentum good about think good we in I

$XXX terms Lovable business are in our know does give started we focusing bit of European we is very Spain, generate us good than if with a in we finite stages, has average transparent just a resources in to operating Italy, wanted got in market, so corporate wholesale some think process, our overview little In are business. margin we that It's with the there, we We've biggest and we can below great with brand really operating you to Die France, DIM this to color. you're for commitment retail some it we -- long-term corporate Nur a details process of being operate to XXXX the share in in we're early online We're Italy Germany, few it's brands. And sales, largely business, bit I'll million to are you, to it. the France, Innerwear but the a the but but Germany, in familiar a brands. terms a and lot best of a but have strong the just on team business, have just let average. The countries where and return. is don't Abanderado Spain, at In $XXX you have very million just the that of the over

but now? developed. we this we'll as in So right process the it us keep you and right So it's business, loop we're a started is for good more business questioning that just a

David Buckley

Thank you. the Appreciate color.

Operator

Our next Barclays. question with comes from Adrienne Yih

Adrienne Yih

opportunities Good connection Millennial, have small with first digitally morning. ThirdLove these question some is or the seems Yes, whether it's let Steve pretty making good of the like native me and up. John. color. the of my Tommy a they -- brands sort thanks you congratulations. My of like viewing how of actually, for It nascent something sort really are add offered all the a are some

second impact SKU any you way, SKUs the that with reduction my does manufacturing And that's variants on the have that, my replacing with with the kind of aspect Scott Thank reduction more Will much. So non-go-forward in non-go-forward the sort on and PPE. is variants for question then this question somatically. first SKU any the are combined manufacturing of you innovation? along very is

Steve Bratspies

brands Maidenform. to right Let understand us at that I closely me of from have can we positioning one very doing they're are learn they and segmentation native challenge sure that's we're Hanes, versus whether that a brands. them Obviously, very interesting. portfolio we consumers each them whether that's about in strong and the and the digitally Bally, they and whether these watch what going our talk out some do. them the is forward make how it clear brands now brand really business, do and attracting there's work first. Yes, we in that's where of lot The look a for there of

One a of done, in times, much to we business and too positioned underway, up capability but to younger it. need to our other, in little that forward apart, do them it. sure well them we I the need think seeing be we each things right I We we're the the push a We been segment look our have there's momentum brands have the presence to and we that to position challenges brands make are I need growing being that -- overlap but we to And few bit implement And talked innovation, have have need many We're with right more position that to think to we and we them is too business. think last we're about but I do double-digits starting improve to that e-commerce the to and capture our broad consumer. the we're have think now to that. earlier. we performance already quarter. the close And

I we have to think have in assets the but do, work We place that we need.

Scott Lewis

were for In supply or we as year, we just and anticipate the question. your that morning. a And we year. COVID not back when on we go manufacturing of Good if any was manufacturing the business of SKU things able as recall to take drag regard of PPE interim. And rest did absorb back into kind the next kind ramped to we down. the and capacity, kind variance the capacity reduction Thanks backup chain full of emerged do to capacity and in work through

and that or, some year the behind an have short-term XXXX of way that and and second-half again did be into as variances go we out and call the about in that we us. international with the we a play was last talked manufacturing in quarter. active the So we But in quarter's drag, fourth saw that'll

Steve Bratspies

just you add the we're we idea The new - be were to And We're to our I adding would to looking adding, we're at going trying going not to to back past. obviously yes. we're the SKUs. answer count that, raise not in know, SKU where is

land just we're to color in forward. basis, younger think is share we're styles I ways drive different the looking being constantly do add some print we're consumers. looking to products go global that our of be a it seasonally more is whether some how we more global silhouettes growth opportunity new we But rotations, event, company, and adding assortment, that, there's a pruning and to an global doing and and of to to we as be in going different we SKUs lift fabrications have more be back So for on and managing at with and and newness relevant

opportunities it the simplifies manufacturing room our process, distribution on in the and So process, us are. our us where model focused be operating XX% gives it our to more, do simplifies reduction allows to growth true

definitely to. grow. SKUs as we'll to we add And looking we're So need

Scott Lewis

more and on efficiencies down performing drive out one Steve costs, reduction, efficiencies runtimes. just lower of just pointing that the the help the was with And some actually identified SKUs with again, SKU point and will we shorter

offset so we're SKUs. to able kind core volume that of with higher And

So I efficient more be would will over expect time. anything

Operator

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

Laurent Vasilescu

quarter, and still we it that and Thank Activewear some you case for for about I quarter? give XXX EBIT XXXX U.S. do How was Spring think last just the it very thanks morning Champion question. fourth about second should for talked on higher margin bookings bps how my the first first did the the think direction think Is down question, you Steve, you since quarter? possibly much. then we about for then us for quarter? levels And could taking Good to Scott, Champion. than Summer grow be where

Steve Bratspies

Scott margin you the Sure, with first. start

Scott Lewis

question. definitely Laurent, Sure, thanks and for your

that pleased the on actually and this the from a we're the So we call, with we from margins incurred overall results and for standpoint, the talked early an down expected actually in we be last second-half. to variances the we're had quarter were some perspective, in margin about for now Activewear with, quarter, fourth Activewear's that in year. unfavorable, manufacturing flowing were through margin the And

margins was our Activewear negatively impacting And business. so for the that

be Now, that behind going that's headwinds XXXX, into us. those we And short-term as move to are we had.

perspective, volumes growth expanding And that as then into so back weighing top that's to we're on line just spread go able can Activewear top going XXXX. more so to as good margin there, it margin be from And a and going even to was before. get to be a where cost in of from we a rebounding simply it increases

Steve Bratspies

Good morning, Laurent.

events then closed, as are are muted, we're about think that and are we're In going. our we us impact for strong working. and we continue the to good really college Champion up is quarter, to going and the college in And in The innovation in had about bookstores there, feeling as and the we well. Champion but And good you and sports big when at go and where quarter. talked business business. and aren't licensing and back us. and And terms remains was XX%, licensing bookings consumers sports quarter, around when really can activities first you being business, a it's working see people to Champion we're XX%, feel reacting, look from that headwind continue forward look expecting Champion, have college good you as headwind momentum, up performance that of yes, the challenge, Global the quarter and obviously the But the the we about for we attending channels third you be at out

So going we're very Champion bullish forward. on

Operator

with Binetti Michael Credit from comes question next Suisse. Our

Michael Binetti

pre-COVID XXXX. the the quarter morning. guidance but the today. for you levels. lot to of good first us speak above focused near-term the that's Thanks quarter operating are guys, for on Steve, for trying minute, details the Hey all to model to an of started all, jump a margin guess first points to I could it

to for the as that those dynamic what yet in margins, get 'XX next quarters trying to just those I'm how lines the that SG&A guide understanding being we businesses with is XQ a full-year. that after try to few don't maybe you well. of think trying is this the you us those looks us to of sustainable I'm think, gross we better through roll or So picture the like. how as business to the want compared quarter first just about versus first quarter, And so can can help margin above

comment costs these the below or the the initiatives. initiatives self-fund have that assume these looking On even you're that to you I'm from transformation exit dilution assuming enough you strategy that on at can the business, stranded then got savings any look it's the though to potential is got early the that potential at corporate have business? Steve, average? other Does some side, margins options the said you in offset Europe when and savings it's there're you Europe

Steve Bratspies

and Sure, can let back. first Scott me then go go

cost our of those substantially want changes to we you any about and yes, start structure modeling, transform start over substantial you and the fund think from of So ongoing real portfolio, very think we time should funding base about a think kind investments think include XXXX, we're help I your our today as kicking-off cost And the savings our initiative, separate investments savings initiative investments, can self the in that made to I that our to today. business. savings our or cost investments self cost you

European in connect Innerwear HEI depending those business, upon, XXXX HEI, our that's word. as I So forward, when I to and go think you sorry, we can refer our internal

that. about Sorry

that innerwear separate our European be not goes. we're would where going initiative. forward. that's it's see that not, savings business, to And Our as I we'll from fund early, investments tending but It's cost how said,

Scott Lewis

to and Excellent. step Activewear let And on know kind that the can segment U.S. for I me we're good QX in the underlying in XXXX, you're the continue about on important saw to good guidance and that first the we're both expected growth back, so that understand a our we it's Innerwear said second-half. International, our your that's momentum strong across of really well. some kind have kind mid in margin double-digit looking business, top the morning, our thanks in I of margins, momentum think a actually question of you of guidance we earlier, really as first to view I top start off at expecting single-digit perspective, line high like and broader can asking from what a drive we for Again, U.S. actually to quarter, growth performance with in see

being still the that Now we're with said, unknown. facing

overall optimistic go comparing you're some lightened guess course of quarter incurred. points improvement last basis we the perspective, XXX very first on charges margin bump XXXX to So we're the and over COVID I operational I when in as challenges, I always, as we're first headwinds into very some we have a COVID that of continuing far big it's but the again, of it's year, profit think as we from quarter think a anticipating in last important of XXXX year. And understand XXXX,

was margin to charge, a started The manufacturing and timeframe, sending when million bankruptcy $XX of And negative in customer gross down we variance a a for were our couple supply March from also back that had first we $XX million. in had part months. of a retail chain which

charges. between improvement last So year this of the repeat first going quarter not would profit gross mix for the as those balance seeing And we're things acts not two chain well. the and savings we're expecting actually the margin done inventory the of from quarter restructuring supply SKU we're of the in SG&A first lower that, year reduction the to the were anticipating back as excess the and obsolete initiatives, anticipating, recently, that we've is benefits in already and also in

the of the also the challenges an incremental things availability supply as some is mentioned, seeing chain and savings incremental we're repackaging demand, now, saying costs quarter. are have logistics impact meet are trying this port freight, continue work costs, constraints first about repackaging includes think inventory, I higher existing to and P&L closer that to little you through some meet going the widespread, we Like leverage going issues And that and that of like customer through product we're costs to kind to to over quarter. that in an there. to a top QX, sales have really about first bit line perspective, mostly congestion operational the the we're but industry-wide So that and and higher just getting deadlines and growth volume. leveraging cost some and leveraging costs those SG&A From kind a it's fixed that of larger the where spreading

Steve Bratspies

of and that. all top So add would just I on

the time. levels be consistent that we'll more higher our May, higher So view much where towards and Investor together company plan, share work in profitability we over growth a goal is a when kind Day, it. intent Scott, But longer-term get our to full our and But, potential kick-off that's of growth, as and really today. we're we we delivers of of this, good

and we're get you feel building we plan a pieces how you and May, get we we'll be together all story in have to to we're that the together to like we good put going when that, long-term tell show So a enables able there. to

Operator

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

Susan Anderson

my morning. a is how wondering performing consumer is I CX Thanks taking if performance the and resonating brand it for good your little into how I talk with about quarter, versus Hey, the and was of Amazon bit guess, you the could question. expectations? the

Steve Bratspies

We our sales trying where We're to business and it's strategy into Amazon in we line expectations as we can do on CX, total now. and to equity directly, and it's they business. pleased focused that we're that Susan. and performing manage there's know but good to Champion we and our in both go our Global looking how really still looking Champion what are understand morning, fits forward. we drive question CX see brand full-year strategy in on Good that were with your forward, with going in answer how loyalty consumer what long-term, the part as Sure. and We're the brand the of Amazon our expect and expectations. at to right expect

Susan Anderson

growth Great. the levels more of And are then thinking the segments I I'm business? inherently like restocking, growth just kind that the lower you're how business, growth of which of a after guess Thanks. thinking a past is we you get about to innerwear, how normalized add for the segment just follow-up, about the curious particularly long-term

Steve Bratspies

we business, growing. are need growth would will And channels, business have What yes, done there in of that and will of that than that after and target in right to you back Yes, pull is categories, modest to one we do, traditional structure, I'm the specifically much what are we And right brands, opportunities. is we've back demographics is past. product the in key growing consumer not for is you understand right do of in And total go underneath. what to been but the those more of others. think assessment have today when be number long-term what going to faster ages, that understanding those we've the And growth covers pricing groups, give has you our the growth I the channel the what go opportunities is the had so segments now. there granular the I our than the to tell business we what right is the able things right are approach products, really much and innerwear

forward, So, more inflection forward, our May, will little talk and going business U.S. we point have the in a an consistent into innerwear about to for growth particularly which that. our our we'll move company bit business as be plan is

Operator

comes Paul Trussell Deutsche Our from with next question Bank.

Paul Trussell

for Hi, additional wanted is can Thank information guess there maybe the if morning. to around you color. what just any see year-to-date. provide good you seen you've I

spoke the more the you're about maybe specifically on the quarter-to-date? across XQ, just business. Europe You and from seeing different what momentum different divisions particularly In geographies

Steve Bratspies

openings, headwind business - and performing challenge in we moving Japan is that of is up very Deans our feel across a strengthen we in and particularly pleased the and but innerwear with champion, that total, is business Europe total, business in total a saw Yes, parts. we're the our business, quarter and consistent us. with that is and We Paul. it's with up, see business headwind And morning, forth, but In there been that's appointed the the Asia is last was has a performance performance is activewear we're the take champion we're closings, leader a Good us. there Australia, really fourth QX, and lot performance. business. a was headwinds performing business to are in good Tanya well, for the Europe by business, and very we innerwear, and that it to European our Sure. to good driven big pleased headwinds, the back of that that And bit level whether and there next in feel different held international Europe it's challenge about over a you about held new was Asia continue going that. time, for really year. the in there,

in The different us that. very places us the like has I feel of chain headwind. we We our a are the lot is, own some forward. competition, allowed our business around us provide supply longer-term and helped some certainly partnerships globe well and like and there understand, we we maybe to week-to-week Asia, mixed China helped a a where environment ability opening, some and a The certainly a it But and this news with Japan - it's and see our chain both starting Champion really so potentially where then of very like and of managing that the online we're has to things China, portfolio spikes closings news well. some manufacturing world, build cases coming other the one of our the space Business, it's of was better as controlling with service to in have to gains around good through government retail but little through for supply Champion for overheaded probably up out which good side held go and that physical type

So is for last put environment. position a organization and through work us second don't I difficult the in that in think hard be a to remiss continued I the organization year our it. thank successful entire take managing they I'd be to the put to if and in really

we challenged about we good feel very to continue environment. that all the I make to and controls in we we and difficult manage are processes have where So in very it place and sure closely a can drive

Paul Trussell

or of numbers think cycle process. And top us you a months? could the that strategic as I understand contribution the just standpoint Appreciate line certainly over some P&L year-over-year, XX and was Maybe EBIT to give the kind PPE, from impact us to it. thought you remind the last on then what business about

Steve Bratspies

you appreciate Sure, obviously. Paul, for on one this PPE up that. the us, following if one, challenging is

did to QX We in just have want it best and changed. finite and the million. really see under resources third in quarter, million $XXX sales of accompany $XX was opportunity we we focus and the market's Back the it's, we growth

pretty trends changed. have declined it's So significantly. Sales

product changing a they're and of mentioned, that. not we go. different I and to difference, the type where like And consumers for is things novelty competitions As want it's lot more what looking

tell number, as roughly was down year, a for big while and we're sales would see a impact, the dollars XXXX was from it obviously a In a terms is writing which it in big it XXXX, it in of in a but don't the perspective. total you, sales I we sales billion contributor headwind

Operator

question Our Sole next comes UBS. Jay with from

Jay Sole

so Great. much taking my for question. Thanks

about of you you is necessary, total cost cover what program self-fund multi-year little in want on say do bids R&D just mean intended to you'll investments something is of questions. of by I to be maybe do with Steve, investments there'll savings top like cost the mean advertising bit a substantially cost from advertising, substantial? your X% savings of XX incremental sales. earlier some And the the savings? clarify investments exactly that When one you the or than think when cost traditionally then So sales, secondly, Does less entirely, R&D of that the total

see With within the us do those you cost intend those you. program, tell the percentages higher? moving? Thank you take just P&L to Can two line where savings items you

Steve Bratspies

Sure.

order. reverse in Let the me questions take

R&D an think terms So I have there. particularly opportunity in of more advertising, advertising. And think have I spend to in we and opportunity we an invest to

we XXXX two. spent historically If twos. the back XXXX, then that you X.X%, about were X.X% the to XX% to this XX% was And low down back range, last look in at in to year we

XXXX year. Now, different a is

we're but going invest brand. and of have is And expect big to our And advertising we development comes varies for R&D. I think world of lot of as us lot with fundamentally, by by opportunity for as spending in. So go have do I more Product a that. in us an It that us part sales. opportunity along on work a percent forward. brands But and in to harder for there's we under we're there, it that corporate varies the think a

invest areas So in as you we those to forward. should go us look for

possibly will much point, self-fund self-fund we will as we be be And to a couple In to to able we going to a investments. substantially making over this our get of know. At to is portion significant don't exact years be to able it. journey, Will be to time, of some -- substantial opportunities it's you, I number a of think we know there. we terms we point as of cost it with know get be I can. honest self-fund goal and to I self-fund know going sight have XXX% to going we're our of of I a don't reduction at line and this the perfectly this is that. investments. be

Operator

from Our Ike Boruchow comes question Wells with Fargo. next

Ike Boruchow

everyone. Hey,

ones two first guided come by me, got the million. basically in for of one quick up couple a to the quarter, count Just share is

kind understanding. there. And what's without going Just maybe you're when that PPE the understanding not a on not just but revenue of saying it how you're describe wrapping headwind. curious, don't view Can recurring, you a the that was I'm -- dollars billion clarify I'm as Steve, I'm and sure end? you you then

Steve Bratspies

Sure.

about Let dollars, bit me PPE. it say wasn't when start I It was with billion the a headwind. of

our we forward. current be our base we'll business lap able business think to with it I as go and

open but we opportunity to had billion we obviously from up number, cover a that big that of see it's markets sales So that the dollars category. as

Scott Lewis

from standpoint, price or our anticipating share count a of shares. the function any stock account fluctuations of And a our share large of any, can not we're a the Really stock price. be in outstanding mix

long-term our plan base. is have also We incentive share

that shares but and conduct price tends outstanding things kind the the the have to year, you So over grants nothing as significant to call share out. and best of fluctuate

Operator

comes John Kernan from with next Cowen. question Our

John Kernan

Hey Thanks taking for good morning. my question.

and So certainly growth specific talk then basis, better Steve, the maybe Innerwear just is organic dynamics the the category. the trend the competitive than first-half in the private much back-half label? the with environment What's earlier of views? on bit PPA competitive producing maybe overall brands. view to on You in so a your in didn't And drivers better on Innerwear. talk even organic growth on ex your what are little just label? view What your U.S. multi-year of a the within the What's about on private DXC a some sales

Steve Bratspies

Sure.

a and we going consumers performance; that good that. there restocking some everyone there time going of that in catches momentum QX, over pulling on the We up. But, things going wane and was there's innerwear little the of couple lot starts of see we will Obviously particularly bit to on. QX have benefit behind, forward. there, probably momentum be In POS terms obviously In a of got out products. as the

that's space the And some of that gains from has team had.

assortment from points. really perspective. our I we inventory stock certain has improve pretty our a relative in through has good helped it's of been accounts that us simplified Some the in think And

think has I new growth as at the and of in execute we think forward. get well, an business and going innerwear helped a we us business still momentum for it's executing for fundamentals the see us. And there. So, products fundamentals I can the opportunity basics we and the the as add it. we should better And lot

come continue In label think we'll And the hold top to But the producing brand BALI, why leaders. they have brand our we mentioned we gaps to something as up being good private our we our all we and price invest brands. to a to from in. want have brands the manufacturing, high Retailers stores. value label, to category. a label cost looking that consumers able brand drive and think we brands top want, manage about, we competitive it's are people like like I and need do to That's brand, we position we we environment. low share so at this have products stores. which to traffic private that me be our thing the should need when for terms versus price their way I right into And, of it's different as is are we brand, to, reasonable good and for but Maidenform the but quality the in private a do brand like extremely Hanes need well jobs before And be the

a advertising equation had we to are minute So, that we that our part back are messaging is just of to discussion innovating, sure make that ago. we the

out getting business relevant retailers brands our that, and in are we brands we time. happy we drive making retailers message are We and do are with incredibly over to traffic desire, and the our that if that

the will behind with with we So, are there. like brands put we that. we compete very need leading are out think other that do And the I well the to foundation act that, brands we all label if along that private and the

Operator

Duffy Jim next comes with Our from Stifel. question

Jim Duffy

HanesBrands start Great and A there Good work for sustainability morning. Thanks for List want by to my guys. carbon footprint. organization their I congratulating on taking question. recognition reducing

Steve Bratspies

Thank you.

Jim Duffy

Scott, the think of where over tightening further some I of areas belt you number the has investment being HanesBrands opportunities? can of behind year process the then business for And that in quarter? but Steven, find guidance savings thoughts going the you highlight 'XX, you rate Can the increase tax share not the talking are know to then, accrued about? the a fourth the And forward? are Scott, that having what's changing I you are given fund what giving period, in on you mix liabilities

Steve Bratspies

is of Let recognition Jim, to callout. first important you is sustainability me the And for us. that all the start. and thank something very

we're to are over it going proud we to increasingly more brands off in to do are and time. company, about is We're going the talk place. DNA in to Something the forward strive and to something in start of in consumers us and an that's us continue which ingrained I our the company. yearly think continue going opportunity It's that to and be you our improve ingrained for into relevant brand. to it see very that And and younger ingrain to ingrained going

the of taken. talked I the we In over a had you terms of program has programs that Hanes lot about, past. learnt And about in approach have time cost a lot have those and

over they about a of reduction just programs cost to I past, isolated lot being difference cost. the say is the the in reducing And you This what Here's is programs. have cost of reduction going kind are plan. it's to savings have the about program XX that strategies into and we initiatives find -- time. helped is potential And full initiatives talked the the into be integrated tied all

So, obviously some mean about and operating all big to SG&A how cost part looking us forward. works of organization at opportunities changing from and changes to work around are will the work the is time. be the around going differently. are the finding look activities are of opportunities buckets. And non-labor going we COVID are we big it's business This looking But at SG&A. lots think not buckets that different the at there. all just I enables over across how -- we horizontally it reduce P&L, about we There our

obviously Our the about supply big line labor differently is chain think cost and model, segmenting going to goods. then, And market as other the of differently. we serving and consumers

of full going really in-depth at to So, plan. I But, we lens optimization, think look it are not the we it a get makes efficient. how of different, for potential standalone we're initiative. doing And, what's do through what It's and going that's forward. and unlock more doing a cost sourcing us cost a really that's lot procurement

Scott Lewis

Thanks for question. your

but the to a the there, performance anything items the driving and a largely higher end taxes at accruals QX. results sales higher of the it's fourth payable tax the year, first quarter XX% quarter, creates liabilities, the always driving up, over volumes our the on rates That's on full-year, at contend that's give the liabilities just accrued kind you accrued standpoint under from time, driving in more to of year. portion that that balance try is trade from of and and strong just we the you really timing of of always tax bit expecting regulations the exists, I you of are the a try ebb mix rate, the mentioned, So, to flow little and can can a our rate the rules this with again we're over the of From but as optimize we that function what's really year, really anything have what's in at but end that's back of incentive that forth our year-to-year. higher that working time, higher manage not off go to advisors really the the income, tax

Operator

Our next C.L. question Associates. comes the from Steve King with Marotta of line

Steve Marotta

How way, DTC the question, morning, regarding T.C. there? particular, have will Steven, Hanesbrands. by the lower has have one you e-commerce think the and about Steve challenges cracked the do years the think forward you how going increased, costs over Good and be quick cracked going for that the do in of shipping recent the If forward? in code very in excellence, one that season costs owned not, Scott, average channel when code versus been you shipping AURs

Steve Bratspies

think both something costs cracked of owned yet, that, major no, Sure. the build do is It's And our we've P&L. and answer Shipping part and a great obviously that our e-commerce how as short are to the partner about out the a we're thinking with it's third-parties. question. on don't we code I

different from be something through would yet we and and of we but that want at pack And certainly fuse, SKU assortment, sense, But paradigm. because how have and SLA that. how build have to is those that's faces. of that as in sizes have this it's solved offer do exactly to what's looking we how we all over time, market play we're it on we're on we everyone go everyone excellence, it to But you, things. want we we differently our the that we this necessarily to not smart as point tell something about point. that want to be that headwind we e-commerce we've at locked a from where to So, done play work lens this at not or we It's all our that as it's business, figured struggling building we've necessarily other with in most the do out of competitors understand to profitable on go how we forward, I build

Steve Marotta

Thanks. of offline. balance the take I'll helpful. questions That's my

Steve Bratspies

Thank you.

Operator

closing like remarks. today's call Robillard the to That to T.C. back turn would concludes question-and-answer for session. I

T.C. Robillard

would We day. our great we like look soon. today forward thank with to speaking and Have to a attending everyone call for you

Operator

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

now may disconnect. You

Hanesbrands (HBI) 9 Feb 212020 Q4 Earnings call transcript