Bonds owner sees consumers turning to value brand underwear in cost of living crunch

Australians have pulled back on buying expensive underwear in favour of value packs of briefs, jockeys and boxers as household budgets continue to be squeezed.

US underwear giant HanesBrands, which owns popular names such as Berlei, Jockey and Bonds, says Australians are purchasing bulk packs of underwear over expensive items as household budgets are squeezed.

Australian consumers have pulled back on buying expensive underwear in favour of value packs of briefs, jockeys and boxers as cost-of-living pressures and squeezed household budgets hit the bottom line.

The US underwear giant HanesBrands, which owns popular names such as Berlei, Jockey and iconic 109-year old Aussie brand Bonds, highlighted the tougher conditions in the Australian economy at a recent investor briefing and revealed local shoppers were particularly feeling the strain.

“The consumer’s certainly challenged.

“Our Australia business, which is an important business for us, that economy is really struggling right there right now,” ­HanesBrands chief executive Stephen Bratspies told US investors and analysts at its quarterly earnings update.

Tightened consumer spending, even on something as basic as underwear, has forced HanesBrands to introduce new value packs to the Australian market to entice shoppers to spend.

“We launched our Bonds ‘everyday’ value product, which is an extension of one of our US products,” Mr Bratspies said.

“This addressed a gap in our assortment that aligns with the current buying behaviour of the Australian consumer, while maintaining a strong margin ­profile.”

The Australian market makes up around two-thirds of HanesBrands’s international business, following its deal to buy Australian clothing company Pacific Brands for $1.1bn in 2016.

The region has been a headache for HanesBrands for a number of years and in the second quarter again suffered a slide in sales.

“Our Australia business, which represents roughly two-thirds of the (international) segment, decreased at a mid-single-digit rate as lingering high interest rates continue to weigh on consumer spending,” Mr Bratspies told analysts at the company’s second-quarter earnings update. “But we’re not standing still in Australia. Despite the macroeconomic headwinds and the consumer’s focus on value, we are continuing to find solutions to drive brand relevance and consumer engagement.

“We are moving products back and forth between the US and Australia … and you’re going to see a very robust pipeline of innovation coming from us.”

A sluggish Australian economy and frugal shoppers have dragged down the underwear maker’s results since at least 2023, when Mr Bratspies warned US analysts the Australian economy was facing growing challenges.

It was only four years ago that HanesBrands had optimistic hopes for its bulging catalogue of underwear brands in Australia, led by the Australian classic label Bonds, and which it saw as a growing $500m business thanks partly to a pivot to a more youthful customer base.

This was achieved at the time by transforming Bonds, famous for its iconic but staid Chesty Bond white singlet, into a youth fashion cham­pion, and helped by signing advertising deals with then superstar AFL player Dusty Martin, which helped give the brand a huge boost.

Meanwhile, the current reporting season has lifted the veil on the difficult trading conditions facing discretionary retail, especially fashion and apparel. Country Road Group, which owns Country Road, Trenery, Mimco, Witchery and Politix, recently reported that its full-year sales declined by 6.8 per cent for the 53 weeks to June 30 and by 8 per cent on a comparable 52-week period, and 13.1 per cent in comparable stores.