HBI - Earnings call transcript Q4 2021

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Operator

Good day and thank you for standing by. Welcome to the Hanesbrands fourth quarter 2021 earnings call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. To ask a question during this session, you’ll need to press star then one on your telephone keypad. conference recorded. today’s advised be may be Please [Operator conference TC over would now Robillard, hand the like to to President Investor Instructions] of I Vice Relations. your host today, ahead. Please go

TC Robillard

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

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

On the cause on actual regulatory exclude or and pandemic time and beliefs action-related which the pandemic otherwise operations today’s in consolidated in to noted, operations, not revise speak well and business as associated the suppliers, may as consumer, financial either materially. our our call any question on to uncertainties which as which Unless and and all made. taken of in and to by SEC, also that are results various operations. other impact the or current news they These undertake force. to the filings the references are to statements restructuring expectations subject as update include website statements, These those the or today, certain of to risks our and based and The customers, to only differ partners, detailed may labor forward-looking guidance those at and forward-looking include charges with and business our found does continuing company speak the in answer may our risks prepared are releases. be to the measures our related or business make our authorities remarks These session. combat we COVID-XX well risks governmental on the statements results

unless Comparisons and all due intimate exited as move XXXX focused that reconciliation Chief Dastugue, Michael are comparisons COVID-XX the are XXXX. stated, otherwise the pandemic, as me XXXX on our discontinued our at XXXX as to CX the impact Chief that the today our found of to have we Financial mass results, program the to DKNY non-GAAP innerwear these the Steve business well apparel performance European have Bratspies, to to additional release. license. news comparisons reflect as can in comparisons measures to note our Given volatility and operations, re-based of GAAP and including been call results well to results, other of Officer. Officer, a today’s information be the Executive With Please

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

Steve Bratspies

everyone, Good results. TC. Hanesbrands welcome. strong and you, morning, fourth Thank delivered quarter and full year

work, a did our decades. operating associates fundamentals Our outstanding our team world. significantly teamwork, XXXX challenging environment hard all thank the dedication of Because delivering our while all job position much of year, that business. want and most an of the exited the long-term initial despite to in global stronger Hanesbrands around global I plan their in strengthening results exceeded

long-term Hanesbrands has significantly and pandemic. and the both had a financially, a than attractive foundation have We stronger we to operationally more profile prior changed. growth

of are full to few one step our our back things we company, consumer-centric, that’s last In laid potential and take rapidly a are We becoming May and progress, plan. clear a If I year, growth-oriented, me. evaluate results-driven. a new

First, our working. strategy growth is

nine the we’re We’re than months strategic our long- consumer were confident increased organization, brands; we term culture seeing in vision our it second, for the and our today financial our of results, more just in even in in ago. demand and

financial XXXX targets As shareholders a potential million result, repurchase the increasing $XXX of and our capital three-year, share returns with plan. a to we’re we addition increased full

very progress. we plan and gaining good about traction our is potential full Our feel

Our business and growth basis; each two, on and three enabling strategy working operate three, foundation. is our are stronger Touching and investments it’s results efficiently effectively; have more to we’re us delivering the evident these. a financial a areas. in One, consistent of we on in

we’re positioned growth for First, prior to pandemic. better today the than

and At Day, plan brands we’re and improvements committed more have to increasing to to we of sheer today’s building growth. our to sell We streamlined business. our made the our we’ve announcement our processes, Investor globally including portfolio, U.S. world-class investment drive integrated, hosiery

our drive and global returns innerwear these gains generate million and share share helped which levels. of XXX In build year on than businesses than growth U.S. and points support to higher innerwear last the gains investments higher globally We’re investments. that basis our helped increased our brands $XX investments growth business. wear pre-pandemic brand, It active Champion XX% marketing our year. global market This and XXXX seeing XXXX. in above with market initial for media these in And good in XX% were fueled also XXXX, very ended sales were our approximately and

to We with in also helped our our our brand and investments improve continued major and These our product to speed investments chain our broaden to efficiencies have assortment diversified in supply market. technology and capture us business, with position strategically demand they in inventory innerwear retail to future and partners particularly and through to increased our allowed have us drive upside growth. shelf U.S. space, invest

that execution. full our indication consistent potential is is second strategy working our The

outlook delivered more team year an of challenged amazing $XXX year delivering most financial job Our in a XXXX well million We investing results to was the and increasingly business both media all sales and held the These in team’s while while able environment. This implement the through is results indication operating million as full year in macro done an even strategy $XXX run million the And the levels. business stronger near-term provided the to Day. in delivering more our working evident global been We’ve has time. change margin results demonstrate Investor much we third relative May ability to long-term at profit foundation our our same to sales results. with our at we we’re and operating strategy prior more that the the growth is pandemic. $XX operating ended We our that and marketing. above consistently on operating profit

lowering strengthened leverage our to our back balance bringing also targeted We times, X.X sheet, range. our leverage us comfortably within

at As there of improving. are see, can you are a happening good things lot underlying and fundamentals our Hanesbrands

expect improvement by half the this headwinds of is current and continuing Some first short-term masked continue margins to of inflation to macro and in this with on XXXX. environment the in weigh we the transportation

cost return to will the of This the in benefit margins expect in continues efficiency provide to half and occur our use and the we of capture expansion. as inflect We the freight, year-over-year gains. savings price to full increases, our and reduction management disciplined air second planned

forward, Looking are we more vision. long-term even today confident in our

and in the driven we’re Our the of seeing with most plan, consumers full by in particularly team’s the to to decades. key progress customers, execute, proven in making challenging the traction the potential growth, our we’re future ability and one investments confidence is drive environments

our As three-year a result, we have financial targets. increased

believe billion years. over approximately XX.X% flow revenue approximately margin For billion. cash to this three returns XXXX, We positions cumulative the of shareholder and and we operating strong adjusted of us drive free next expect approximately $X.X $X of now

We’re drive investing to business in growth. the

all We’re quarter. the expect we this full this do our also And potential to based buying outlook, able on paying while sheet. a meaningful stock to simultaneously dividend. be balance We’ll of back begin de-leveraging

of So brands. good the summary, and consumer fundamentals about demand very in our the feel we underlying our strong business for

drive we’re growth, working, growth strategy turn call investing is full opportunity and shareholder higher with long-term our the in future ability And Michael. we’re Our to that, even over our for to returns. confident today potential more I’ll and

Michael Dastugue

Steve. Thanks,

plan. strong investments the was are driving We’re team various consumer challenges. demand are our quarter solid our brands, the an job year making seeing continues managing The in for full macro traction our results. and This and do evident full fourth to in through we amazing growth-related potential

For outlook margin headwind tax our and above Adjusted came at expected and sales to in expectations. the our share in profit outlook, than per outpace per share of our despite in a line the continues high with operating our fourth rate. end demand with from supply. range quarter, while $X.XX strong the were was were adjusted operating remains higher Consumer earnings line

key remarks, quarter the today’s well on insights I’ll our additional on provide highlights from outlook. as as For touch some

included As of PPE points points rate compared year’s sales XXrd to as XXX Combined, XXXX, quarter as approximately from and the sales the PPE basis well these from a quarter’s XXX Last with XXrd week. increased basis X% basis $X.XX to coming XXX billion. week. nearly headwind points represented growth to

currency constant XX over sales Adjusting experienced on a point rates headwind prior for in basis exchange flipped a items, We foreign which growth X% from increased drag on the year fourth a quarter. to these also basis.

constant fourth to grew XXXX increased XXXX, Europe across with the sales of Americas and U.S., in continued over in women’s innerwear, and of the On growth XX% growth XX% quarter consumer currency well growth double-digit sales with sales XX% the socks, increased each and U.S. $XXX quarter to in China. growth increased compared ramp-up fourth globally growth kids, XX%. brand in million. as Champion’s by Champion the businesses, was the and demand partners driven XXXX as sales As basis, in Australia, XX% channels XX% strong our Switching our including or in internationally. quarter U.S. over a men’s.

and increased good brands. investments media growth see Bali the our We Maidenform, continue to with results Hanes, from across

Looking more XXXX. and international Australia, sales Americas compared driven million business, by our demand to the strong Gross our brands profit at China. than $XX XXXX over in XX% X% or increased Europe, for increased

point SG&A of fourth able made our With our margin in labor in of margin in organization well expense our benefits our to came the as we able our the and of of XX.X% the the XXXX. vast basis potential. transportation related centers to the the investments Operating the in above of of expedite time the in from and quarter range in our our cost XXX previously our amount driver Disciplined cost with despite cost, for on respect expectations. were initiative, profit higher decline from With we to partners. high our decision of mentioned high headwinds expected at basis, costs SG&A inflation across percent consistent product at to quarter. end supplier was planned the the mix, offset operating the improvements sets was space $XXX expense was primary This distribution With while the offset efficiency the retail as quarter. to gained, programs a of SKU million such strategic management the majority was sales marketing retail end expedite manufacturing savings space new in consolidation, full gross more brand in arrive we to the as reduction business the from

XX% how globally. the XXXX XX% increased Champion in XX% the Sales increasingly per especially driven saw team in million environment to strong good with brand inflationary as marketing pleased in $X.XX. as adjusted with at investor share results, laid initially million. U.S. margin were $XXX approximately Looking operating and of I’m incremental earnings global and managed XX% XX.X% growth and to $XXX relates year. sales was by increase difficult the and $X.X investments, We delivering we XXXX year, operating to profit $XX XX% full or Adjusted operating consistent increased despite the the it and growth out innerwear challenging XXXX. This Adjusted compared day. of was of profitability billion, year an through outlook the million for or at

and to due high higher with our flow $XXX year. the ended liquidity disciplined working decision balance investments demand, in our exceed year to from the operations to cash management. for $XXX we higher total of We of flow consumer million of cash profitability were with inventory to million turning capital strategic sheet, $X.XX generated expectation Now support levels cash levels over able billion. Even and of to of of the increase the and we end

year Leverage EBITDA net and performance Our X.X adjusted XXXX. basis. of significant into financial translating times is was times X.X X.X debt end at a improved strong improvement the This on from the end quarter strength. at is last a to times of the

to you guidance, news outlook. FAQ thoughts I’ll like details; our point our additional for to frame would to and Now few document share guidance however, turning I to release a

last first headwinds, We expect down in invest supply to and full continued potential market macro remains execution we year. to the to and Consumer chain over our however, remaining we’re sales revenue continuing standpoint and X% From transportation our growth share. in our including marketing, of slowing half; in challenging and environment are to we the XXXX, increase increase for demand strong X% plan. not inflation technology, particularly a the expect drive to XXXX, sales

be quarter, up to to X%. the we For first sales flat expect

making are transportation investments market disruptions benefits seeing higher year’s and logistics we globally fully supply demand comp and supply causing challenges. are absent for are continue all we sales full which to we consumer inventory. Said and growth brands capture in feel demand in to continued of share XXXX. media, constraints one-time our of growth to and good the and last global environment, marketing drive quarter These ability levels the first would outlook our continued the are we both higher demand, the differently, said, ability the based these on for chain our about in-transit we With be be sales even our restricting are additional seeing. consumer year and impacted by gains in That

our innerwear segments, outlook X% prior year. to flat our for down year full our assumes sales segment for U.S. at over Looking

year. we supply to For the X% mid quarter, a in we growth other decline sales international the mentioned. expect segment as segment our compared approximately just single challenges wear for by to single-digit segments expect active to the our our on in sales digit growth basis reported With prior I sales innerwear full high and driven first respect year,

planned half This Turning to and last the margins is pressure the and in our margin to comments in timing and space quarter, in tied driven on expect well strategic on to operating line plan. as spend the first potential our more with decision innovation basis. continue margin gross a our both from investments by of we as inflation, launches full product growth-related expediting to gains, to our service retail

For similar the decline we operating in an range. expect guidance first a our the decline points rate midpoint margin gross amount what basis we XXX the quarter, we fourth by approximately to margin quarter, prior at of experienced over to the expect year of and

basis. the QX margins through an absolute expect and trough to expect We comparison to on both both sequentially gross and build year-over-year year. for represent operating margins then We the

margins return expect at the to inflect and to we half, second operating Looking both gross year-over-year expansion. and

based Our discrete within on items our confidence that is control. several are

through wear our midway in active fully begin in through at increases QX place to First, will price innerwear place and flow midyear.

the and are full impact first and $X.XX share, share and cost for inflation. QX expedite any year, from and both service from of remainder are significant full additional guidance per ramp meaningfully the note to helping our earnings to With QX the of earnings year savings gains the share retail to Second, of $X.XX cost I’ll mitigate respect adjusted to to impact expected launches the EPS half new year, first innovation to per space EPS of to third, decline programs our expected our year through throughout guidance and exclude quarter $X.XX. calls repurchases. for our $X.XX efficiency

the first his As remarks, shares Steve in repurchasing in to mentioned quarter. we expect begin

In solid closing, traction in We market conditions. full upon while plan. depending and expect are to to we potential opportunistic repurchase our shares be maintaining quarterly performance flexibility seeing

investments brands, strengthen will market despite increase returns, investments disruptions, long These to our as and strategic future growth invest we and drive term expected share, both making are to and for continue growth. profit generating current the are planned. We macro

place we the we have expect the to remain in in While first them. environment the we through understand manage challenges half and to plans challenging,

fully in improvement the second roll about temporary the As will margin you’ve place year costs the the feel off. we expedite in good of as pricing heard, be and half

over our of for repurchase the share financial potential which reflected plan. $XXX targets a I full feel back to our XXXX made about and this is believe We’re long and really that, organization board’s we’ve confident in plan, With authorization in years. progress I going what the next term increased three Steve. accomplish I’m turn is million I’ll to the about call the excited good

Steve Bratspies

good things Thanks Michael. at There are a of lot Hanesbrands. happening

this our of and being fundamentals term headwinds, stronger. some macro near strong While by is masked underlying are getting

There like call. are as I’d year away the this We you increasingly things from to visible expect to be progresses. take this three

and operating returns. prior declined. generating First, foundation leverage financially are and pandemic. well operationally related XXXX our than and has a stronger levels Revenue has have it above investments to increased Hanesbrands and Growth both are profit the did

term a more targets. as Second, today confident and our long result, even opportunity three-year we we’re financial in raised our

we’re driven consumers the our the and potential confidence full execute and plan, ability Our customers, to and the by challenging our traction of is in even environments. with seeing deliver consistently progress proven global macro in team

results. in seeing and financial is across growth it and Our we’re our organization strategy working the

focused returns capital we’re increasing to Finally, shareholders. on

outlook we’ll the investing We’re paying sheet. Hanesbrands potential this continue based of a balance our stock becoming de-lever is the quarter, new buying culture to full dividend, built growth, back drive in a on the performance. plan, of business a to we’ll we’re company on rapidly meaningful and begin

positioned With We’re returns the very drive TC. call well we’re higher results-driven, consumer-centric, that, growth-oriented, next we’re turn the over and shareholder we’re years. to three over to I’ll

TC Robillard

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

Operator

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

Omar Saad

morning. Good Thanks.

great Appreciate all the quarter. information as Another well.

question, you’re You XXXX Maybe give going it about confident new key based of the base. more you mean elevated Thanks. much would inflation pricing there get year grow longer-term beyond in business revenues, inflation, had of today. be already its you’re again you margin that some And such the freight, believe factors elevated an be is that sales off just you underlying and this on of talk this for going power to the and this Hanes How do and about you’re on kind expedited record business? for to going grow guidance the I to company, an structure? confidence the your talk that - structural And structure? we able that follow-up cost year there’s what’s once pretty the in and to please also, seems in my base maybe could guess, is what

Steve Bratspies

Good the question. Omar, thanks for morning

So way we numbers, the really business are in big terms of feel is grow. and certainly but we year’s to we to the overlapping some the this yes, have continue good about that tracking revenue, opportunity

that? is biggest piece underlying demand. consumer what’s So The

as lot really we want the but to the investments starting I’m challenging generate traction continue forward. of to will Our supply year, as the to confidence that me now, well. issue our a good we’re outpacing plan that go an see be products in on is consumers us to which to right we’ll potential returns for strong, throughout see, said, that we’ll good will and know challenge environment which that environment want as that, meet challenge on continue really is we a our gives thrive brands, full making, starting more that we even continued do demand

really remains break You look business, at in to the we’ve had innerwear business, innovation by it demand Obviously excited transportation the strong. about of some business. come down headwinds. U.S. I’m starting the you that that’s

to support total successful - that’s launch product X-Temp was TSP pouch a that We’re so year. last going

to by component which think for add lagging that our has a I’m I a seeing innovation while. of to going adding it. coming onto business, We’re performance out intimates good some been

a Maidenform so there. see innovation really there, So and and good space news basis, continuing we’re geographies, on a both Champion new global starting pipeline gain to good doors, momentum we’re up coming new coming of pick behind to has Bali.

that more we They’ve see that to and going us in some opportunity as behind women Your marketing after you’ll And target strong. in COVID, for business, there, more hopeful through directly big because Own this year thing, March grow going open in overlaps have campaign so start specifically segment. a our probably new we we year we’re go international, by our to as from get some more same We’re Champion are we’ll all to that positive doors this been in so we have know consistently Japan. aggressive hit businesses Be Europe

relationships business underlying positive brands and take the The of macro consumer, tailwinds the for way of excited business, underlying are you all customer environment. to we in us. want of a headwinds piece? second the the as So the real fight our in they’re lot the about strength the the Michael, strength

Michael Dastugue

and lesser increase, Yes, goods wage certain we look started believe that part for year. every controlling on and extent, inflation, then this cost of price about biggest power. the think kicks We raw there’s wear probably at pricing do the in right, middle the We of it, Omar, we’re we sold the quarter clearly, extent of can point, pressure. year-over-year increases in the first the business, we have as things is the pressure. here at to control. Transportation And a materials in active as to we a innerwear

and the we’re with conversations No raise in customers. doing all thoughtfully but to think you’d want having one to price about. price, and really likes us We’re things keeping it mind gaps

the in - initiative. One price, the so how with year efficiency for the continuing offset not thinking we just it’s talked to do is of cost thing SKU with we’re that reduction last that And but and terms we where say it programs consumers inflation Happy over about the savings. from all say and about ago, couple a and reduced that continue most sure to still our XX% years customers. SKUs and assortment we the we’re were would drive making at have make value and opportunities look things to that for we’re our that I of we

cost, that’s supply our through especially Additionally, working in chain, biggest supplier where consolidations. we’re

half We’re we’re We last overhead back raw looking that make in in the on year investments at to to of utilizing started equipment waste. the minimizing sure work making appropriately, reductions. materials

start about feel we so think I And good XXXX. we that as

there’s And about half big the then the feel we cost So, inflation to price year. it, get and picture, of good we second initiatives. offset the especially to once there’s

Steve Bratspies

of power brands. pricing on thing one add the just me let and Yes,

We’re play our throughout seen and that out we’ve and the of just domestically. the year, power pricing brands, not very confident in it’s

going all through. Europe on China in all through accepted flowing We that have are the been by retailers, and and have - Japan the normal price calendars category

So have our do brands power. pricing

flow and start through P&L. to you’ll the about concerned that way, in not that see price We’re any

Omar Saad

Thanks.

Steve Bratspies

Thank you.

Operator

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

Susan Anderson

Hi, good morning.

to share sounds congrats could you how line, similar was past, this I at those the of like market my the how if much quarter. And talk the mainly see chasing manage curious me may big curious sounds I’m then seeing about restocking gains. on units. maybe just what maybe there point? some with nice pricing any pretty to to retailers also inventory or that to out guess, add was much still re-stocking wondering, top kind And of but those It’s much continue was the it are concern demand, in you’re like start that that of I still there is it it of are Let but versus not inventory? on then we’ve POS, I growth we the -- past seen guess, in consistent, you as innerwear, Thanks. also,

Steve Bratspies

Susan. Sure, for good Thanks morning, questions. the

guy we feel in a go through so terms business innerwear, of growth forward, as we’re on I’m critically more about by and being this it’s focuses units, unit lot pricing type the I that’s not lot volume, gone In volume through. has on driven for volume it’s good a business, of important in who of a yet, so focuses increase driving that.

year. May - May, we in If about you do million the in this for more gave we sales in than numbers we $XXX we thought where you would think built we

volume that’s chain our huge of great through supply So our doing amount job incremental and a volume. meeting system pumping of a

actually incremental but demand more year. we’ve huge actually There’s it. able of all meet add this to been a the to than for able brands meet, been haven’t We

going restocking, forward. of don’t I a terms of In see ton restocking

huge year, I as we meet expedite I of have the that we think trying into of that our incremental a to inventory, going in that going more really costs one terms demand That’s we on one-to-one about feel to the us. that no space basis have space, we do. permanent going trying we’re to a with gained retailers are space year, we’ve than but degree of absolute don’t were now a retailers. equilibrium kind we carry, that’s reasons forward. that go lot that, doubt the position We in are in last hit about there’s to on key and be so we of POS retailers see this reduce of And to good the increase a inventories always

the we to inventory continue So build we’ll good with that feel about going levels retailers forward.

about business SKU our reduction. of traditionally and out we’re operated. mentioned over We XX% earlier, think our we very SKUs Michael how we it versus As took focused on we’re where and running business,

to have going journey inventory make that efficient more that sure that our we market. SKUs We’re is continue reduce on the efficient to become in and and incredibly

Susan Anderson

Thanks helpful. year. luck that’s this so much. Great, Good

Operator

with next Suisse. comes Credit from Michael Our Binetti question

Rick Patel

Michael. Patel on road taking morning. the Good This to on is Rick We for Thanks get for map our margins. question. color more hoping were for

about on over I expansion term? term for as target what XXXX. some margin takes and more the the you’re there’s think updated Your can pathway there in expecting from details XXXX we know the puts reflects near pressure, but longer you some provide

Michael Dastugue

especially think out the the ago this back you feel laid in thing top think step Michael, I and with the Okay, the about yes good number We line. guys we We is about months to team momentum, growing one relative we nine over-delivered when momentum when the May. clearly plan it, year. the

is we the target different that so really we about looked reset There to efficiency of and I inflation, When what on investments host we clearly make in be you supply for think top would the up. the feel be the how cost it’s to is going so team margins, to at for the As consolidation, investments and a and XXXX, the majority costs. the it’s chain think There’s about good do line media, continuing and then that that. in growth, we initiatives, rationalization, talked pricing going be we to of pricing wasn’t could is would as products. ago, to supplier a of months to things factored continuation ago. of is SKU the percent minutes That so nine some on, all help is going working take said, reduce than we touched in internalizing is factored models care what whole the of just productivity the sales go in--the continue more factored that have media about few back there there our into probably inflation

going make going the to we’re leverage we’re help going investments, to for to but us to going the that’s to investments XXXX. We’re out margins deliver make and that we sales those in that we’ve talked laid technology about,

Steve Bratspies

and you capabilities other a and talk covered that thing I doing Michael, add half the on that deliver about business our to work now. I domestically, capacity going efficient lot as thing distribution lot much in go next so right we forward of of fulfilment adding get to would be one able as we’ll business a just this would is efficiently, more into there of grows, but The more to we more back add, we’re grow and to on year probably work product have it, DTC year

to we DC initiative how cost we we’re every to how across by as potential. - that single that We’re out we who forward. off cost the of business, as take of so sides able to really day wholesale going and are going the the to business that part savings, going those cost continue we do be are good top and buildings kicked about things core go really the and both we’re labor so we and operate running to It’s different full line our on going drive mix we the cost of to we’re increases mitigate feel looking at a differently, lot there’s transformation

Rick Patel

shelf gains in from you relative a about touch and the think are we It so outlook quarter to Can very increases little quarters, do we the share share gains on to about seems as think That’s for that how environment helpful. like up, more here? the the bit XXXX? space price competitive market coming prior also got fourth accelerate in market [indiscernible]

Steve Bratspies

Sure.

You know, market passionate battle, to team of share talk things I’m time. and I the about that is incredibly always about all it’s and one the a the

a our market price, As that’s believer for business market we’re we to mantras good changes - that’s metric one whether mix, operate. not going big being in of portfolio, share make whether through to I’m our a business. us and through that’s lose as we the core share to run assortment

space with to is example, like our and that, we of which using obviously about we’re key time we’ve strategic to business we go into a component how products, and new key the of year, business talked that about next type products that’s so incremental grow to and we gained an inflation. Pricing think cover over just a a going we that cost in you innerwear of best component. some going a forward, gained going fill so a As space lot space as lever as forward, is

to manage price, it be shelf. the sure you’ve got that then by smart at to gaps you be absolute season product think to price by able really it about and channel, gaps, to by You’ve got about price make channel product, season and

a with business this mindset. very running are We competitive

disciplined go continuing very We’re gain a each and market to to then with, extremely there, and plan strategic has focused market on to highly a we both an business right they gain cadence but think sure competitive competitive a that continue operating all share. to make plan, market of operating it’s out businesses, got good across our we’ve really I share - you’re

Rick Patel

you. Good luck Thank the in year. new

Steve Bratspies

Thank you.

Operator

with next Boruchow from comes Our question Ike Fargo. Wells

Ike Boruchow

Hey, down margin gross just was on Gross as in good margin. QX. couple a QX the around--I to Michael, morning similar think everyone.

the You product talked which costs the expedited sense. to about totally get on shelf, makes

headwind that - in then that today XXXX what saw what when I to in that that cost expedited can in this was if normalized we expectation quantify missed specifically that and more is in QX, you QX, the it is, a you expecting the follow-up for lap quarter back environment? comes you’re your you all Sorry fourth to

Michael Dastugue

cost XXXX, expedite initiatives kind will impacts these Yes, offset the in what’s costs, pricing it we back will or is believe of We QX in in term there freight happening impact, etc., a called perspective so the to like to going and we put decline we’ve cost. and about the the freight will pressure and air other it make from what got think investment like didn’t do that. is materials, think QX, year, or to happened QX our so pressure quantified some that sense really on to QX--or, look these talking of think out made it a on normalized putting and the to key and be when But pressure gradually things it’s put we continue expedite ocean to haven’t I as the space felt customers gains, long on we think the raw inflationary QX rate. it the and the half while on more we out we’re of temporary as we a and

Steve Bratspies

the issues it short going us, we’re marketplace. after Yes, loose space. be and aggressive disruption growth talked markets and that to opportunity with a sales going there’s we’ll I expedite an we’re going and we’re behind said, more the as add go out, an and but issue and to We’ve expedite, we when us thing to just to it bit little the opportunity out our win, because to out teams term going near growth - will try--we’re support very on and in win we’re earlier, as it we’re some in a to going One margin let opportunities. gain view a This capture and you and tailwind our an going I aggressively. term space company go we’ll creates business. would that, to of out Michael, it that to in is the play have about brand going we’re have It’s teams coming as space

Ike Boruchow

view I that in guess a transitory as the right? you question I’m is the getting business, at cost

Michael Dastugue

We yes. do,

Steve Bratspies

Yes.

Ike Boruchow

are decline or the to year-over-year Michael quarter you gross Okay, the remain one - follow-up, to just--should down start again actually margins Should margin before by QX, in the in just gross get understandable. time they and ultimately we the then expand second inflecting, quick quarter? second

Michael Dastugue

the improve Yes, year-over-year half will throughout be yes, the the by gross up. back it margin will and year,

Ike Boruchow

Thank great. Okay, you.

Operator

next Jim question with comes from Stifel. Duffy Our

Jim Duffy

wanted I some morning. to dig in simplification good on strategy. you, the Thank

drivers of SKU improvement? shelf additional in context What about building the the a more opportunities are then ago. we curious and reductions the be gains. year how of should to rationalization just XX% some Then about XX% and space the if from could you for up stepped I’m You’ve simplification, capital areas you’ve specific on of working SKU that, think product for levels the identified

Steve Bratspies

further, the good XX%, we’re has Jim. and that team’s has tackled, don’t this I I’m the SKU is organization why about put it’s it. stepped aggressive That’s Sure, SKU effort we with the and team can really really over an reduction way. up been morning the reduction. done. think behind pleased emotional and by go hard, but issue we’re

have we and to grow in think build be I that and to opportunities disciplined. continue space continue to really

a business, forward. going we’re launching also reduce so that we’re of go not the Now, products, we be expanding able to there’s how of been time up over excess builds to that think in terms new we’re contracting, but means as about and that we lot we’ve

In to terms broad. it. where of year, able been the of this that gains, but beginning we’ve some shelf with It’s there’s we’ve it, do space comes part cost been pleased in talked with gotten been I’ve and we’ve about

driven it across for of a customers things, the customers, the we experienced so some categories is and space it all shelf driven more existing of Some is we other becoming our products, different is different couple by brand of these. gaining in it’s by--usually major space just have have

is in are want it they new that to create that of Some coming products space for.

in shelf do give on make performance they want more sure more to just space so and is it to the shelf key items, that. to of at Some you they stock space stay need

putting product, of another gain mentioned I and coming towards over space. some new that’s going to so one it do play those we’ve leaning We Maidenform under make have seen difference a Some brand, out. innovation really good really going brand Also, going all is move we’re some aligned and the be X-Temp be younger. there be around support and total and and getting broader pouch is it. to leaning to that seems media behind a this some to customers into us with big there’s that out key

basis of said we the XXX but on share where some journey We’ve working we’re early need to been component very progress really I about in over positive XX, call example reduction. good, brands of green a It’s that core shoot under points we talk and of you to SKU to we’re get that’s of it but journey men in underwear over making. in I’ve started terms ones, early Michael, our quarter have and that’s a that that pleased really fourth time. results, benefit some initial getting with let capital younger, gain. the it. of men’s gained leaning share We a into see of that I’ll where and

Michael Dastugue

on probably the a as the inventory XX% well above can we’re about to because rationalization is to stock going job we--I think for in have a in now us not term I given sure Longer up turns in-transit. a think great get here year, in mind - do our Yes, performers, but inflationary we’re and at at doing see that amount, do our be think that in-transit so--and inventory absolutely. sit I In-transits increase scrutinize I’m a inventory so tell that aspects, is of inflation, place frankly with to and will point. keep right it term that, better longer manage we’ll some but It’s assortment predict opportunity to of best last that hard come down SKU that. lot and to us of continues helping that the our up upside. to I and lot is look know, you you over make there of

Jim Duffy

guys. Great, work. thank you Nice

Operator

Our LeJuez next question comes Citi. with from Paul

Brandon Cheatham

XQ inflationary passed you’re gotten are margin other on Anything are more transportation on dig there headwind on innerwear, gross in that first expecting fourth least quarter, a everyone, along? or Hey may the of pressures Brandon similar kind price Paul. the wanted - At that. you to hit, in quarter quarter for dig is on increases expecting are can you there the have Can the headwind gross margin. versus not than first you provide that XQ. in this Cheatham but I

Michael Dastugue

you’re it QX. in I inflation think in it the year of we got more rolling--you Yes, you’ve back is QX, started that in the last saw seeing seeing of half some

the more saw it price you’ll that we of of QX. a the QX middle in costs and the and will margin, example, increase expedite in in active freight the you so second quarter you’re in go The don’t start so like QX, air increase in innerwear, year, get seeing the again for that you’ll quarter, throughout innerwear creating get full we on the what’s as middle but pressure and quarter, seeing the You’re of until said, the the improve wear year. that’s increases

Brandon Cheatham

of is with Got it, The that? or Where being can helpful. domestic how of containers that freight on very vast you much the rate air is that’s of maybe out trucking? parse majority spot costs, transportation versus

Michael Dastugue

of guidance, have. clearly significantly, couple general all - factored freight have we’ve companies the last follow. just up so. across into ocean air of we The traditionally the transportation cost would in you’re that’s you than Yes, the more quarters, probably seeing It’s as freight,

Brandon Cheatham

driving come from Got million? it. Champion. plan, think I incremental the one is If $XXX on in that term could What $XXX segments more incremental I expected to are revenue squeeze your gains, long million other

Steve Bratspies

I that the contribute expect of excited that increased U.S. the businesses--I there. a we target on to basis, all businesses global and to going business. that, should the are contribute expect so out to in components It’s all to that’s the business from to grow international contribute have and I’m that innerwear about the will business continue Champion that, the across put all we to that $XXX the momentum million coming but

Brandon Cheatham

Appreciate luck guys. good it,

Steve Bratspies

Thank you.

Operator

from comes Sole Jay question with next UBS. Our

Jay Sole

to this much. was little of continues category little bit on you talk opportunities the a so of work could you’ve some you. and you Asian Thank and different Steve, on. that you can see seen Great, if brand. that thank picture to Champion in the as Maybe work markets, you brand bigger some about I what maybe just the bit, continue more on wondering elaborate the China you a opportunity

Steve Bratspies

Champion. about Jay. morning really feel Good I good

momentum on momentum. space, gaining new XX% doors, up were to expanding the a sales just in some Middle we’re new you categories global a We new it basis, Africa, said global good QX at of--the We this picking the kind global time build to geographies XXXX, expanding up all core we’re so have brand at there. brand same South the on are we’re When continues a East, versus have there. of - look we launched and components in basis you building so

- little was The make we starting faster think work a see we’re some Europe is dying there is to we’re that’s to to on, excited progress includes that other move I that starting I that’s and they’re space. line have team on, really sources I but starting very to our that Champion trends, derived to putting natural out capture like now thing latest that. from the in think organic hot of the more a right do innovation and

Our product. super and more momentum has, soft, really soft it’s is even poly leggings and than a material touch innovation sports to in that’s bras recycled starting catch it versatile and got

called domestically concept momentum Own as good a segment women, as of win going Your forward. it we’re around The a grow. because for continue more Champion into we with things us go we lot big leaning has lot and of brand it’s a that’s a start to growth You’re doing will to see and to behind know Be

well. to that. talk consumer and traffic us there that evolve. has by You and - impacted minute a we about been with pleased me growing have partnerships China feel Really those stores responding COVID, the mentioned in obviously, let how to that we others, take Like continue is but really

us we got we partners it for again impacting see hit to going by because there, so of get it traffic is we continue well business with big so past but bullish new business still stores, the our We’ve of well. think extremely forward. the We what past but go can as can forward. ecomm to we have think to China, that store we Japan in done are and extremely as consumer China, omicron really get we’re right need model there growing, with Other the parts receives opportunity fundamentals do is omicron, we and strong, be very the Champion on our a it open

business in the at well. look doing I we’re As total around Champion,

growth continues to brand challenger reach momentum we’re new lot for opportunities in to about good. segments by opportunities, the XXXX, We got talked have do we way to we’ve and that of us so get kids behind we’re $XXX biggest, and our above We’ve million that a expand. continues we brand the the is offers think add can brand geographies, new the the to right build in and forward to with to targeted the this brand we’ve our as think better targets. as innovation necessarily past, not and and we’re continue continue go it find opportunities think better we I even previous playing space, a grow that we women, but for

Jay Sole

so Got it, you much. thank

Operator

question Our from Morgan. from comes next JP Carla Casella

Carla Casella

Hi.

for the of potential timing as and First additional asset whole sold thoughts did us sale, a sales on asset any could that proceeds all, you give be or in of parts?

Michael Dastugue

question asking Carla, would We your you. having you again? were a mind hard time hearing

Carla Casella

the you Okay. from you’ve were payment coming and if a is The sheer or in. proceeds sheer sale, them I’m wondering if delayed received sale, there if gave the what all

Michael Dastugue

The hosiery announcement, sheer hosiery?

Carla Casella

Yes.

Michael Dastugue

it announced Yes, we took a that available the expect charge for quarter, and so fourth in transaction to sometime we million XXXX. made sale, complete we that during $XX we

Carla Casella

international? update any the on and Okay,

Michael Dastugue

business? innerwear European The

Carla Casella

Yes.

Michael Dastugue

close to the quarter. expected in That’s first

Carla Casella

Do that? the amount we know on

Steve Bratspies

euro in sale back we On that a QX the we which European one innerwear business, announced that for announced was

Carla Casella

over--given today, a - you higher initiatives, are of you’ve COVID? do of about I others expect shelf your COVID, and to that. lot Then the some sorry, additional are the who come you space one you’re some think your has and missed a gotten. biggest you those retail because after follow-up Okay business of Can or talk level changed at stable partners back just

Steve Bratspies

our into we COVID. would but they a grow coming what to have anything we’re or out products very channel and in of businesses the their all mix but business with, won’t good to those our our happening dramatic dramatic dramatic customers. that, our with feel expect I partnered we’re We you There’s that specifics as in and there. mix growing a ups is downs opportunities brands different COVID, that present. by customers, go Not with, shift don’t and and response about that the we to the get and business position and individual be customers and I and goes, things that change I necessarily as continue of tell the different not change like we’ll market always like

Carla Casella

and great, give the amount Okay, you generated that hosiery business profit I’m the in past? sheer of the operating did sorry,

Michael Dastugue

are our for the What million, perspective. this that we is year and it’s was provided number that breakeven $XX sales business numbers the this for a the about guidance. year expectation That factored is a from profit into

Operator

Our with Tom comes next Wedbush. question Nikic from

Tom Nikic

Hey, wanted plan. up taking about to the I full the for on guys. potential questions. good question my morning earlier follow Thanks

I expect innerwear. you segments think mentioned you to grow, all that including U.S.

longer similar XXXX, a to grower the category would the you’ve growth in and mentioned grow single that X% to of guiding U.S. about has term, think in down that to low I beyond that you be innerwear you’re it past, been little historically, U.S. innerwear expect digit-ish obviously a rate? but bit type

Steve Bratspies

over rates we at start going innerwear settle in growing that as down. Yes, outpace wish those thanks once to this still go that demand grow continues to I category supply-demand expect still won’t. onto supply to expect in see faster we rate balance for do all the term now, basis out, of out. years, category year, obviously all we our the for The last we’re settle that go we been--as as that the base for has our we X% as to had expect going would - but settle X%, growth we like will in category expect maybe said on that settles continue forward go as question. couple our to category been we we that we will XXXX supply Part the rates, It’s innerwear, the It was on in than business to I’ve outpace for it long we’re been expect is XX, in category. the to It’s a reflects build it we down, disrupted innerwear so of growth I The and we we forward. in long XX%, grow as to and it. going numbers basis the comp that expect kinds past, that forward. numbers and but we time category, will go expect those moderate goals. that’s back a as growth forward, comp to term in that to past of some XXs will of year, degree growth year guidance that as hold top of to this there, itself and majority huge high teens, to outstripping that and certainly chain this go growth our we’ve low as vast Right forward the

Tom Nikic

buyback the very Understood, potential so number tax could help EPS rate? million help over any you get give Do interest $XXX item, us far there the One as an the three that on if of guidance EBIT that Anything you line helpful. ask. Is kind years? of would expect expense, the below could I the to helpful. be whole more, next use to as plan could or us full

Steve Bratspies

it that about The the the three $XXX approved years. capital program out was the think the felt that we like to next things we of million with, so board one over come was allocation, we important that when out. Yes, for lay hadn’t

deleverage upon our a that’s When in say stock, would excess The business, an good to years, year. going we’re U.S. be and etc. buy the the for about where an in it’s depend appreciate, some Interest priority guided of taxes, a market is sales rates upward of There used probably it’s a to function we we business, going cash you to able that’s term plan. to XX% number I one now, other probably so average I and going we’re that for tax and rate, right higher up. short to also have to we’re invest this think of have and be function able more, XX% go be if can so expense, mix, conditions, in this to rate. is that over the profits to you and to you just back and three going tax think your of so generate pressure, going where the countries number to As is performance, invest really

We as again work through figure etc. to deleverage--you once factored of--we market and have be, generate, but rates some expecting you’ve is where know, up, we to have math for in year’s that on going to the the we out is because the also this you based excess got guidance cash have

think I top line the is key momentum. continue to the and growth

Tom Nikic

helpful. very year. much, of this That’s luck Thanks best and

Steve Bratspies

Thank you.

Operator

comes question CL Our Steve from Marotta next with King.

Steve Marotta

and Good late. I running morning two Michael I know questions. Stephen, we’re just quick TC. have

XXXX? is normalized will the what’s exiting is now? target right at in expect First, point to time feel at what My do more chain, where out-of-stock in follow-up supply balance; you leverage this Thanks. to in be year most levels what other as it equilibrium what do as the compared pertains you your supply-demand occurring words, you’ll point that hit

Steve Bratspies

Sure.

improve, go We second so are it going going expedite half, normalized in to Part In this so get way get in the supply the some more. there, all right have I in that’s start the I have That to you inventory probably in during of it back think that system the the disruption is eyes terms and say we’ll of all said, going balance. you’re that’s we have we’re inventory to of supply all and guidance. could the does down improve, now, have think expect in than think benefit markedly half we a to year, in supply but and I we’re from year. bucket going I’m in do to why lot see chain the that still the the open. be don’t back a right to we’re not going now, as those got sure chain costs access supply through half more of the you’ll wouldn’t to better is our factored itself But the the in-transit and reason fix I start first the throughout that year chain, balance to year, in wide chain I think so the into that disruption we’ve out way

Michael Dastugue

our the a which XXXX and times. ended We to Yes, with three at XX% ’XX long two regard X.X, between leverage over metric, is goal which term is improvement was X.X.

year. that of As know don’t it’s I the much inputs year the It around about function an would flow ended be different probably to a and the this plus that at go the a cash $XXX you capex, performance will we over high be investment of this range. saw, into that or that of our I and calculation. it, X.X think as change going million, increase just expect you minus of end the is function all

Steve Marotta

thank helpful, Terrifically you.

Operator

question today’s to session. closing for concludes the Robillard back to and That I’d answer like TC remarks. turn call

TC Robillard

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

Operator

conference for participating. you today’s call. concludes Thank This

disconnect. now may You

Hanesbrands (HBI) 3 Feb 222021 Q4 Earnings call transcript