Why Clothing Company HanesBrands Shares Are Tumbling Today

HanesBrands Inc HBI shares are trading lower after the company reported fourth-quarter FY23 results.

Sales declined 12% Y/Y to $1.30 billion, missing the analyst consensus estimate of $1.36 billion.

On an organic constant currency basis, net sales fell 10% as the global consumer environment was more challenging than expected, particularly in the U.S. activewear market and in Australia.

Innerwear sales declined 1% Y/Y, Activewear sales decreased 24% Y/Y and International sales decreased 9% Y/Y.

Global Champion brand sales decreased 23% Y/Y on a reported basis, with a 30% Y/Y decline in the U.S. and a 14% drop internationally. 

Adjusted gross margin expanded 395 basis points Y/Y to 38.2%, led by inventory actions, cost savings initiatives, and lower input costs. 

Adjusted operating margin expanded 295 basis points to 8.5%, and adjusted operating income rose to $111 million from $83 million the prior year quarter.

Adjusted EPS from continuing operations of $0.03 missed the consensus estimate of $0.09.

Inventories stood at $1.37 billion, and the company held $206 million in cash and equivalents as of December 30. Cash flow from operations for the quarter was $274 million.

Outlook: HanesBrands expects 2024 sales of $5.35 billion-$5.47 billion versus an estimate of $5.58 billion and adjusted EPS from continuing operations of $0.42-$0.48 versus the $0.48 estimate.

The company expects to pay down over $300 million of debt in 2024. 

For the first quarter, the company anticipates sales of $1.13 billion-$1.19 billion against the estimate of $1.31 billion and adjusted EPS loss from continuing operations of $(0.10)-$(0.04) vs. the street view of $0.06.

Price Action: HBI shares are down 12.3% at $4.13 on the last check Thursday.