Why HanesBrands (HBI) Shares Are Plunging Today - Hanesbrands (NYSE:HBI)

HanesBrands Inc HBI reported a fourth-quarter FY22 sales decline of 16% year-on-year to $1.473 billion, beating the consensus of $1.46 billion.
The constant currency sales decline of 13% was due to the macro-driven slowdown in consumer spending in the U.S. and certain international markets.
Innerwear sales decreased 19% Y/Y due to macroeconomic pressures that weighed on consumer spending as well as the impact from retailer actions to manage inventory. Activewear sales declined 16%.
Global Champion brand sales decreased 18% on a reported basis, with a 21% decline in the U.S. and a 13% decline internationally.
Gross margin contracted 400 basis points Y/Y to 34.1%. Operating margin contracted 480 basis points to 4.1%, and operating income for the quarter fell 61.5% to $60 million.
Inventories increased 25% Y/Y to $1.97 billion. The company held $238.4 million in cash and equivalents as of Dec. 31, 2022. Cash flow from operations for the quarter was $132.8 million.
Adjusted EPS of $0.07 was in-line with the analyst consensus.
HanesBrands' Board eliminated the company's quarterly cash dividend as it shifted its capital allocation strategy to focus all its free cash flow on reducing debt.
Outlook: HanesBrands expects FY23 sales of $6.05 billion - $6.20 billion versus an estimate of $6.23 billion. It sees FY23 adj EPS of $0.31 - $0.42 versus the $0.98 estimate.
For Q1, it anticipates sales of $1.35 billion - $1.40 billion, with an estimate of $1.43 billion. It sees FY23 adjusted loss per share of $(0.09) – $(0.04) against an estimate of $0.14.
The company continues to expect to achieve its long-term financial targets of approximately $8 billion in net sales and an approximate 14.4% operating margin. The company now expects to achieve these targets at the end of 2026.
Price Action: HBI shares are trading lower by 22.85% at $6.72 on the last check Thursday.

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HanesBrands Plunges On Gloomy Outlook, Dividend Cut

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