Michael P. Dastugue
Chief Financial Officer at Hanesbrands
Thanks, Steve. We're seeing solid traction in our full potential plan. The growth related investments we are making are driving consumer demand for our brands and the team continues to do an amazing job managing through the various macro challenges. This was evident in our strong fourth quarter and full year results. For the fourth quarter, sales were in line with our expectations. Consumer demand remains strong and continues to outpace supply. Adjusted operating profit was at the high end of our range, while adjusted operating margin came in above our outlook. And earnings per share were in line with our outlook, despite a $0.02 per share headwind from the higher-than-expected tax rate. For today's remarks, I'll touch on some key highlights from the quarter as well as provide additional insights on our outlook.
As compared to 2020, sales increased 4% to $1.75 billion. Last year's quarter included PPE sales as well as a 53rd week. Combined, these represented nearly 500 basis points of headwind to the quarter's growth rate, with 175 basis points coming from PPE and approximately 300 basis points from the 53rd week. We also experienced a 60 basis point drag on growth from foreign exchange rates, which flipped to a headwind in the fourth quarter. Adjusting for these items, sales increased 9% over prior year on a constant currency basis. As compared to fourth quarter 2019, sales increased 15% or $230 million. On a constant currency basis, sales grew 14%. Champion brand sales globally increased 25% over fourth quarter 2019 with 33% growth in the U.S. and 15% growth internationally. Champion's growth in the quarter was driven by strong consumer demand across channels in the U.S., continued growth in Europe and the Americas and Australia as well as the ramp up of our partners in China.
Switching to U.S. Innerwear. Sales increased 19% over 2019 with double-digit growth in each of our businesses, including socks, kids, women's and men's. We continue to see good results from our increased media investments with growth across the Hanes, MAIDENFORM and BALI brands. Looking at our international business, sales increased 10% over 2019, driven by strong demand for our brands in Europe, Australia, the Americas and China.
Gross profit increased more than $50 million or 8% compared to 2019. With the amount of new retail space we gained, we made the strategic decision to expedite more product to arrive in time for the space sets at our retail partners. This was the primary driver of the 235 basis point decline in our gross margin in the quarter. With efficiency improvements in our manufacturing, from programs such as supplier consolidation, cost savings from our SKU reduction initiative, as well as benefits from business mix, we were able to offset the vast majority of the inflation and transportation cost headwinds in the quarter. With respect to SG&A, on a percent of sales basis, our SG&A expense was consistent with our fourth quarter 2019. Disciplined expense management across the organization was able to offset the higher expected labor cost in our distribution centers and the planned investments in our brand marketing related to full potential. Operating profit of $220 million came in at the high end of our range despite the previously mentioned expedite costs, while operating margin of 12.6% was above the high end of our expectations.
Looking at the full year, I'm pleased with how the global team managed through the increasingly challenging year and delivering strong results, especially as it relates to the outlook we initially laid out at Investor Day. Sales for 2021 were $6.8 billion dollars, an increase of 13% or $800 million as compared to 2019. This was driven by 21% growth in U.S. Innerwear and approximately 20% growth in Champion brand sales globally. Adjusted operating profit increased 14% or $111 million. We saw good profitability in the year. Adjusted operating margin of 13.7% was consistent with 2019 despite the difficult operating and inflationary environment and incremental $70 million of marketing investments. And adjusted earnings per share increased 26% to $1.83.
Now turning to cash flow and the balance sheet, we ended the year with over $530 million of cash and total liquidity of $1.75 billion. We generated $623 million of cash flow from operations for the year. Even with our strategic decision to increase investments in inventory to support higher levels of consumer demand, we were able to exceed the high end of our expectation, due to higher levels of profitability and disciplined working capital management. Our strong performance is translating into improved financial strength. Leverage at the end of the quarter was 2.7 times on a net debt to adjusted EBITDA basis. This is a significant improvement from 3.5 times last year and 2.9 times at the end of 2019.
And now turning to guidance. I'll point you to our news release and FAQ document for additional guidance details. However, I would like to share a few thoughts to frame our outlook. We expect the macro environment to remain challenging in 2022, including continued inflation and transportation headwinds, particularly in the first half. However, we are not slowing down the execution of our full potential plan. Consumer demand remains strong and we're continuing to invest in marketing, technology and our supply chain to drive sales growth and increase our market share. From a revenue standpoint, for 2022, we expect sales to increase 3% to 5% over last year. For the first quarter, we expect sales to be flat to up 4%. With the consumer demand we are seeing for our brands and the continued investments we are making in marketing and media, we feel good about our ability to comp last year's one-time sales benefits and drive additional growth and market share gains globally in 2022.
That said, we continue to be impacted by disruptions in the global transportation and logistics environment, which are causing higher levels of in-transit inventory. These continued supply constraints are restricting our ability to fully capture all of the consumer demand we are seeing. Said differently, based on demand, our sales growth outlook would be even higher for both the first quarter and full year absent these supply chain challenges. Looking at our segments. Our outlook assumes full year sales for our U.S. Innerwear segment for flat to down 2% over prior year. For the first quarter, we expect Innerwear sales to decline approximately 3% driven by the supply challenges I just mentioned. With respect to our other segments for the full year, we expect high single digit sales growth in our Activewear segment and mid-single digit sales growth on a reported basis in our International segment as compared to prior year.
Turning to margins and in line with our comments from last quarter, we expect margin pressure to continue in the first half on both a gross and operating margin basis. This is driven by the timing of inflation. Our strategic decision to spend more on expediting product to service, our innovation launches and retail space gains as well as the planned increase in growth related investments tied to our full potential plan. For the first quarter, we expect the gross margin rate to decline over prior year by a similar amount to what we experienced in the fourth quarter and we expect an operating margin decline of approximately 420 basis points at the midpoint of our guidance range. We expect Q1 to represent the trough for both gross and operating margins on both an absolute and year-over-year comparison basis. We then expect margins to build sequentially through the year.
Looking at the second half, we expect both gross and operating margins to inflect and return to year-over-year expansion, Our confidence is based on several discrete items that are within our control. First, our price increases will begin to fully flow through with Innerwear in place midway through Q1 and Activewear in place at mid-year. Second, the significant Q1 expedite cost to service our new retail space gains and first half innovation launches are expected to decline meaningfully throughout the remainder of the year. And third, additional savings from our cost and efficiency programs are expected to ramp through the year, helping to mitigate the impact of inflation. With respect to adjusted earnings per share, our guidance calls for full-year EPS of $1.64 to $1.81 and first quarter EPS of $0.24 to $0.31. I'll note, our earnings per share guidance for both Q1 and full year exclude any impact from share repurchases. As Steve mentioned in his remarks, we expect to begin repurchasing shares in the first quarter. We expect to repurchase shares quarterly while maintaining flexibility to be opportunistic depending upon performance and market conditions.
So in closing, we are seeing solid traction in our full potential plan. We are making strategic investments to strengthen our brands, increase market share and drive long-term growth. These investments are generating expected returns and despite the current macro disruptions, we will continue to invest for both future growth and profit as planned. While we expect the environment in the first half to remain challenging, we understand the challenges and we have plans in place to manage through them. As you've heard, we feel good about the margin improvement in the second half of the year as pricing will be fully in place and the temporary expedite costs roll off. We're confident in our long-term full potential plan, which is reflected in our increased financial targets for 2024 and the Board's authorization of a $600 million share repurchase plan.
I feel really good about the progress we've made, and I'm excited about what I believe this organization is going to accomplish over the next three years. And with that, I'll turn the call back to Steve.
