Hanesbrands Soars 14% After Q2 Earnings: Strength In US Innerwear Unit And Margin Gains Drive Upbeat Performance

Hanesbrands Inc. HBI shares are trading higher after the company reported second-quarter results.

The company reported quarterly adjusted earnings per share of 15 cents, beating the street view of 10 cents.

Adjusted gross margin of 39.8% increased approximately 525 basis points as compared to second-quarter 2023. The year-over-year improvement was driven primarily by lower input costs as the company continues to anniversary the impact from peak inflation as well as the benefits from cost savings initiatives.

“We delivered solid second-quarter results in a challenging consumer and apparel market, including better-than-expected U.S. innerwear performance and margin expansion,” said Steve Bratspies, CEO.

Quarterly sales from continuing operations were $995.4 million versus the analyst consensus of $1.357 billion.

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Net sales from continuing operations decreased 4% compared to prior year as sales declines continued to moderate. On an organic, constant-currency basis, net sales decreased by 1%.

“We’ve also identified additional savings opportunities to drive a step-function change in our cost structure, which combined with our current margin improvement initiatives and lower interest expense gives us visibility to strong double-digit EPS growth over the next several years,” added Bratspies. 

At the end of the quarter, the total liquidity position was more than $1.3 billion, consisting of $214 million of cash and equivalents and more than $1 billion of available capacity under the company’s credit facilities.

Inventory at the end of the quarter of $938 million, decreased 20%, or $235 million, year-over-year.

Outlook: HanesBrands adjusted its full-year 2024 guidance to reflect continuing operations.

For FY24, the company sees net sales from continuing operations of approximately $3.59 billion to $3.63 billion versus estimate of $5.14 billion (prior view for net sales: $5.35 billion to $5.47 billion), which includes projected headwinds of approximately $50 million from last year’s U.S. Sheer Hosiery divestiture and approximately $40 million from changes in foreign currency exchange rates. 

Adjusted earnings per share from continuing operations is expected to be approximately $0.31 to $0.37 versus the estimate of $0.45 (prior view for adjusted EPS: $0.42 to $0.48).

For the third quarter, the company sees net sales from continuing operations of approximately $920 million to $950 million (estimate: $1.49 billion).

Adjusted earnings per share from continuing operations is expected to be approximately $0.09 to $0.14 (estimate: $0.23).

Price Action: HBI shares are trading higher by 14.4% to $5.95 at last check Thursday.

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