Shares of clothing company HanesBrands Inc. (NYSE:HBI) are trading higher on Thursday after the company reported better-than-expected first-quarter 2025 earnings.

Sales grew 2.1% year-over-year to $760.148 million, beating the analyst consensus estimate of $752.34 million. Adjusted EPS of 7 cents beat the analyst consensus of 2 cents.

U.S. net sales declined 1% year over year as gains in Basics, Active, and New were outweighed by ongoing challenges in Intimate Apparel business. Operating margin rose to 20.9%, up 285 basis points from last year, driven by cost savings, lower input costs, and a better product mix.

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International net sales declined 2% on a reported basis due to a $12 million FX headwind but rose 4% in constant currency, with growth in Australia and Asia. Operating margin improved to 11.5%, up 310 basis points, driven by a favorable mix, cost savings, and lower input costs.

Adjusted gross profit also grew 6% to $316 million, with an adjusted gross margin rising 165 basis points to 41.6%, excluding restructuring-related charges.

Adjusted operating profit rose 61% to $81 million, and adjusted operating margin improved 390 basis points to 10.7% compared to last year.

Inventory fell 5% year-over-year to $977 million, aided by better SKU management, lower costs, and stronger sales.

Operating cash outflow was $108 million, compared to an inflow of $26 million last year, due to seasonal inventory builds for back-to-school, while free cash outflow was $119 million, down from an inflow of $6 million.

"We also reiterated our full-year outlook, which now reflects our expected impact from U.S. tariffs, as the current environment presents challenges but also creates real revenue opportunities. We're confident we can fully mitigate the cost headwinds as we have many levers to pull, including further cost reductions and pricing actions,” commented Steve Bratspies, CEO.

“We're also actively pursuing new revenue opportunities, which we believe we're in an advantaged position to capture given our western hemisphere supply chain speed and capabilities matched with our strong retailer relationships,” he added.

Second quarter Outlook: HanesBrands anticipates sales of $970 million against an estimate of $972.50 million. It sees adjusted EPS of $0.18 against an estimate of $0.19.

2025 Outlook: HBI reaffirms sales guidance of $3.47 billion to $3.52 billion versus an estimated $3.50 billion. It sees FY25 adjusted EPS of $0.51 to $0.55 versus the $0.51 estimate.

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Price Action: At the last check on Thursday, HBI shares were trading higher by 4.60% to $5.115.

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