On August 8, 2024, Hanesbrands Inc (HBI, Financial) released its 8-K filing for the second quarter of 2024. Hanesbrands, a manufacturer of basic and athletic apparel under brands like Hanes, Playtex, Maidenform, Bali, Berlei, and Bonds, reported mixed results with earnings per share (EPS) surpassing analyst estimates but revenue falling short.
Company Overview
Hanesbrands Inc (HBI, Financial) manufactures basic and athletic apparel under brands including Hanes, Playtex, Maidenform, Bali, Berlei, and Bonds. The company sells wholesale to discount, midmarket, and department store retailers as well as direct to consumers through stores and e-commerce. Hanesbrands is vertically integrated as it produces more than 70% of its products in company-controlled factories in more than three dozen nations. Hanesbrands distributes products in the Americas and Asia-Pacific. The company was founded in 1901 and is based in Winston-Salem, North Carolina.
Performance and Challenges
Hanesbrands Inc (HBI, Financial) reported net sales from continuing operations of $995 million, a 4% decrease compared to the prior year. This decline was attributed to unfavorable foreign exchange rates and the divestiture of the U.S. Sheer Hosiery business. On an organic constant currency basis, net sales decreased by 1%. Despite these challenges, the company gained an additional 40 basis points of innerwear market share in the U.S., driven by increased marketing investments and product innovation.
Financial Achievements
Adjusted operating profit from continuing operations increased by 46% to $126 million, and adjusted earnings per share from continuing operations surged by 650% to $0.15. These achievements were primarily driven by lower input costs and cost savings initiatives. The company also generated $78 million in cash flow from operations and reduced its debt balance for the seventh consecutive quarter.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Net Sales | $995 million | $1,035 million | -3.8% |
| Gross Profit | $307 million | $357 million | -14.0% |
| Operating Profit (Loss) | $(63) million | $70 million | -190.0% |
| Adjusted EPS | $0.15 | $0.02 | 650% |
Balance Sheet and Cash Flow
Hanesbrands Inc (HBI, Financial) ended the second quarter with a liquidity position of over $1.3 billion, including $214 million in cash and equivalents. The company's inventory decreased by 20% year-over-year to $938 million, reflecting improved inventory management and lower input costs. Cash flow from operations was $78 million, compared to $88 million in the same period last year.
Strategic Actions and Future Outlook
Hanesbrands Inc (HBI, Financial) announced the sale of its global Champion business and the exit of its U.S. outlet stores, which have been reclassified to discontinued operations. These strategic actions are expected to create a more focused and simplified business with consistent revenue growth, higher margins, and strong cash generation. The company plans to pay down approximately $1 billion of debt in the second half of 2024 using the net proceeds from the Champion sale and internal cash generation.
Analysis
Hanesbrands Inc (HBI, Financial) has demonstrated resilience in a challenging market environment by focusing on core operations and strategic divestitures. The company's ability to increase market share in the U.S. innerwear segment and achieve significant cost savings highlights its operational efficiency. However, the decline in net sales and the impact of foreign exchange rates remain concerns. The successful execution of its strategic actions and debt reduction plans will be crucial for unlocking shareholder value in the coming years.
For more detailed financial information and analysis, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Hanesbrands Inc for further details.
