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Basis of Presentation | 6 Months Ended
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Jun. 29, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Basis of Presentation | Basis of Presentation These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management believes that the disclosures made are adequate for a fair statement of the results of operations, financial condition and cash flows of Hanesbrands Inc. and its consolidated subsidiaries (the “Company” or “Hanesbrands”). In the opinion of management, the condensed consolidated interim financial statements reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. The preparation of condensed consolidated interim financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2023. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year or any future period. In September 2023, the Company announced that its Board of Directors and executive leadership team, with the assistance of financial and legal advisors, were undertaking an evaluation of strategic alternatives for the global Champion business. As part of this process, the Company’s Board of Directors considered a broad range of alternatives to maximize shareholder value and also considered an evaluation of the strategic alternatives for the Company’s U.S.-based outlet store business impacted by the global Champion business. In the second quarter of 2024, the Company reached the decision to exit the global Champion and U.S.-based outlet store businesses. At that time, the Company announced that it had reached an agreement to sell the global Champion business to Authentic Brands Group LLC (“Authentic”). Under the agreement, Authentic will purchase the intellectual property and certain operating assets of, and will assume certain liabilities of, the global Champion business for an estimated transaction value of $1,200,000, subject to final adjustments, with the potential to reach up to $1,500,000 through additional contingent cash consideration of up to $300,000. The Company plans to use the estimated net sale proceeds of $900,000, including working capital adjustments and customary transaction costs and excluding any additional cash consideration, to pay down a portion of the Company’s outstanding term debt as required by the senior secured credit facility (the “Senior Secured Credit Facility”). The transaction is expected to close in the second half of 2024. After the closing of the transaction, the Company will provide certain transition services to Authentic and will continue to operate the global Champion business in certain sectors and geographies through a transition period ending on January 31, 2025 (the “Deferred Business”). At the end of the transition period, Authentic will purchase from the Company the remaining inventory of the Deferred Business. The transaction excludes the net operating assets of the Champion business in Japan, which the Company will retain and continue to operate as a licensee of Authentic for a temporary period of time and ultimately transition the operations to Authentic after January 2025 pursuant to the terms of a license agreement to be entered into at the closing of the transaction. In the second quarter of 2024, the Company began actively marketing its U.S.-based outlet store business to prospective buyers. In July 2024, the Company entered into a purchase agreement with Restore Capital (HCR Stores), LLC (“Restore”), an affiliate of Hilco Merchant Resources, LLC and completed the exit of the U.S.-based outlet store business. Under the purchase agreement, the Company agreed to pay Restore $12,000 at closing and an additional $3,000 in January 2025 and to provide certain inventory to Restore, in exchange for Restore agreeing to assume the operations and certain liabilities of the Company’s U.S.-based outlet store business. The agreement with Restore does not include the Champion-branded U.S. retail stores, which will be addressed in accordance with the purchase agreement governing the pending sale of the global Champion business to Authentic. The Company determined that the exit of the global Champion and U.S.-based outlet store businesses represented multiple components of a single strategic plan that met held-for-sale and discontinued operations accounting criteria at the end of the second quarter of 2024. Accordingly, the Company began to separately report the results of the global Champion and U.S.-based outlet store businesses as discontinued operations in its Condensed Consolidated Statements of Operations and to present the related assets and liabilities as held for sale in its Condensed Consolidated Balance Sheets. These changes have been applied to all periods presented. Unless otherwise noted, discussion within these notes to the condensed consolidated interim financial statements relates to continuing operations. See Note “Assets and Liabilities of Businesses Held for Sale” for additional information about discontinued operations. In addition, the Company realigned its reportable segments in the second quarter of 2024 and has applied this change to all periods presented. See Note “Business Segment Information” for additional information about reportable segments. Ransomware Attack As previously disclosed, on May 24, 2022, the Company identified that it had become subject to a ransomware attack (the “2022 ransomware attack”) and activated its incident response and business continuity plans designed to contain the incident. As part of the Company’s forensic investigation and assessment of the impact, the Company determined that certain of its information technology systems were affected by the ransomware attack. Upon discovering the incident, which has been contained, the Company took a series of measures to further safeguard the integrity of its information technology systems, including working with cybersecurity experts to contain the incident and implementing business continuity plans to restore and support continued operations. There is no ongoing operational impact on the Company’s ability to provide its products and services. The Company maintains insurance, including coverage for cyber-attacks, subject to certain deductibles and policy limitations, in an amount that the Company believes appropriate. During the quarter and six months ended July 1, 2023, the Company received business interruption insurance proceeds of $5,562 and incurred costs of $511, net of expected insurance recoveries, related primarily to legal fees associated with the 2022 ransomware attack. The insurance proceeds received during the quarter and six months ended July 1, 2023 are related primarily to the recovery of lost profit from 2022 business interruptions and are reflected in the “Cost of sales” line of the Condensed Consolidated Statements of Operations. The legal fees and the offsetting expected insurance recoveries are reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Operations in the quarter and six months ended July 1, 2023.

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