Hanesbrands Inc. HBI reported first-quarter 2025 results, with both top and bottom lines increasing year over year. Net sales missed the Zacks Consensus Estimate while earnings beat the same.

The company posted adjusted earnings from continuing operations of 7 cents per share, surpassing the Zacks Consensus Estimate of 3 cents. The metric increased from a loss from continuing operations of 5 cents per share in the year-ago quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Hanesbrands Inc. Price, Consensus and EPS SurpriseHanesbrands Inc. Price, Consensus and EPS Surprise

Hanesbrands Inc. price-consensus-eps-surprise-chart | Hanesbrands Inc. Quote

Net sales from continuing operations increased 2.1% year over year to $760 million and missed the Zacks Consensus Estimate of $766 million. On a constant-currency (cc) basis, organic net sales were consistent with the prior year.

HBI’s Margin & Cost Details

Adjusted gross profit was $316 million, up 6% year over year. The adjusted gross margin was 41.6%, up nearly 165 basis points (bps). Gross profit and the gross margin rose year over year due to reduced input costs, cost-saving initiatives and effective assortment management.

Adjusted SG&A costs were $235 million, down 5% year over year. As a percentage of net sales, adjusted SG&A costs decreased 225 bps to 31%. This decrease was largely due to continued benefits from cost-saving efforts and disciplined expense management. These gains more than offset a 50-basis point increase in planned, strategic brand investments.

Adjusted operating profit was $81 million, up 61% year over year. Adjusted operating margin was 10.7%, up 390 bps.

Hanesbrands’ Segmental Details

U.S. Segment: The segment’s net sales decreased 1.4% year over year to $536.2 million. Despite the expected market downturn in this quarter, the company remained focused on its core growth drivers, innovation, increased brand investment and expanded programming initiatives. These efforts led to year-over-year growth in its Basics, Active and New business lines. However, this was outweighed by ongoing softness in the Intimate Apparel segment, consistent with broader innerwear market trends.

The segmental operating margin was 20.9%, up almost 285 bps. This improvement was mainly fueled by cost-saving initiatives, lower input costs and favorable product mix.

International Segment: International net sales decreased 2.2% on a reported basis to $195.5 million, which included a $12 million headwind from unfavorable foreign exchange rates. On a constant-currency basis, sales increased 4% year over year, driven by growth in Australia and Asia, while sales in the Americas remained consistent with the prior year.

The operating margin of 11.5% increased 310 bps from the prior year, driven by favorable product mix, ongoing cost-saving initiatives and lower input costs.

The Zacks Consensus Estimate of net sales of the U.S. and International segments was pegged at $555 million and $190 million, respectively, for the quarter under review.

Story Continues

HBI’s Financial Snapshot: Cash, Debt & Equity Overview

This Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $175.9 million, long-term debt of $2.32 billion and total stockholders’ equity of $43.4 million. 

In the quarter, the company registered negative $108 million in net cash from operating activities. The free cash flow was negative $119 million in the first quarter.

Hanesbrands’ Q2 & 2025 Guidance

For the second quarter of 2025, the company projects net sales from continuing operations of $970 million, including a $15-million foreign currency exchange rate headwind. This is consistent with the prior-year quarter on both a reported and organic constant-currency basis.

Operating profit from continuing operations is estimated at $129 million, while adjusted operating profit is expected to be $136 million, excluding $7 million in restructuring and action-related pretax charges. The operating profit outlook includes a projected $2 million foreign currency headwind. Earnings per share from continuing operations are pegged at 16 cents, while adjusted earnings from continuing operations are pinned at 18 cents.

For 2025, the company expects net sales from continuing operations between $3.47 billion and $3.52 billion, factoring in an estimated $60 million headwind from foreign currency exchange rates. At the mid-point, net sales are expected to be unchanged from the prior year on a reported basis and grow 1% on an organic constant-currency basis. 

Operating profit from continuing operations is now expected to be between $425 million and $440 million compared with the prior guidance of $420 million to $440 million. Adjusted operating profit is projected between $450 million and $465 million, excluding estimated restructuring and action-related pretax charges of $25 million. The operating profit outlook includes a projected $8 million foreign currency headwind.

Earnings per share from continuing operations are estimated in the range of 42 cents to 46 cents compared with the prior outlook of 39-45 cents. Adjusted earnings per share are estimated between 51 cents and 55 cents. 

The company anticipates $350 million in cash flow from operations and capital investments of $65 million, including $50 million in capital expenditure and $15 million in cloud computing arrangements. The free cash flow is expected to be $300 million. 

HBI’s shares have lost 35% in the past three months compared with the industry’s 26.2% decline.Zacks Investment Research

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