HanesBrands Q2 Revenue Decline 5% Due To Macro-Driven Slowdown In Consumer Spending

HanesBrands Inc HBI reported second-quarter (Q2) 2023 sales decline of 5% year-on-year to $1.44 billion, missing the analyst consensus estimate of $1.46 billion.

The constant currency sales declined 4% with growth in the U.S. Innerwear and Champion in Asia more than offset by the decline in U.S. Activewear and the continued macro-driven slowdown in consumer spending impacting Australia.

Innerwear sales increased 3% Y/Y and Activewear sales declined 19%.

Global Champion brand sales decreased 16% on a reported basis, with a 25% decline in the U.S. and a 1% decline internationally.

Gross margin contracted 430 basis points Y/Y to 33.5%. Operating margin contracted 490 basis points to 4.9%, and operating income for the quarter fell 53.1% to $69 million.

Inventories decreased 12% Y/Y to $1.84 billion. The company held $191.8 million in cash and equivalents as of July 1. Cash flow from operations for the quarter was $88 million.

Adjusted EPS beat the analyst consensus.

Outlook: HanesBrands expects 2023 sales of $5.8 billion to $5.9 billion versus an estimate of $6.05 billion. It sees 2023 adjusted EPS of $0.16 to $0.30 versus the $0.31 estimate.

For Q3, it anticipates sales of $1.52 billion to $1.57 billion, with an estimate of $1.68 billion. It sees FY23 adjusted EPS of $0.07 to $0.13 against an estimate of $0.2.

Price Action: HBI shares are trading lower by 3.1% at $5.16 on the last check Thursday.