Hanesbrands Inc. HBI has reported fourth-quarter 2024 results, with the top line increasing year over year and missing the Zacks Consensus Estimate. The bottom line improved from the year-ago quarter’s reported figure and surpassed the consensus mark.
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The company posted adjusted earnings from continuing operations of 17 cents per share, surpassing the Zacks Consensus Estimate of earnings of 14 cents. The metric increased from 5 cents in the year-ago quarter.
Net sales from continuing operations increased 4.5% year over year to $888.5 million and lagged the Zacks Consensus Estimate of $899 million. On a constant-currency (cc) basis, organic net sales increased 3.8%.
Hanesbrands Inc. Price, Consensus and EPS Surprise
Hanesbrands Inc. price-consensus-eps-surprise-chart | Hanesbrands Inc. Quote
HBI’s Margin & Cost Details
Adjusted gross profit came in at $391.5 million, up 15% year over year. The adjusted gross margin was 43.9%, up nearly 410 basis points (bps). Gross profit and the gross margin rose year over year due to accelerated cost-saving initiatives and reduced input costs.
Adjusted SG&A costs stood at $265.5 million, up 8.1% year over year. As a percentage of net sales, adjusted SG&A costs increased by 100 bps to 29.9%. This rise was largely due to a strategic brand investment that led to a 125-bps rise. This was partially offset by cost-saving initiatives and disciplined cost management.
Adjusted operating profit came in at $126 million, up 32.8% year over year. Adjusted operating margin was 14.2%, up 300 bps.
Hanesbrands’ Segmental Details
Starting from second-quarter 2024, HBI reorganized its reporting segments into U.S. and International categories.
U.S. Segment: The segment’s net sales grew 3% year over year to $618.7 million, driven by innovations in innerwear, such as Hanes Absolute Socks, Hanes Moves, Hanes Supersoft and Bali Breathe, along with additional holiday programming and new category growth.
The segmental operating margin was 23.1%, up almost 525 bps. This improvement was mainly fueled by cost-saving initiatives and lower input costs, which supported a 30% rise in brand investments aimed at boosting consumer demand for product innovations in both Men’s and Women’s lines.
International Segment: International net sales grew 2% on a reported basis to $252.9 million despite a $9-million headwind from unfavorable foreign exchange rates. On a constant-currency basis, sales increased 6% year over year, driven by growth in Australia, the Americas and Asia.
The operating margin of 12.6% declined approximately 550 bps from the prior year due to transactional foreign exchange headwinds, business mix and brand investments. This decline was partially offset by lower input costs and benefits from cost-saving initiatives.
The Zacks Consensus Estimate of net sales of U.S. and International segments were pegged at $612.7 million and $284.8 million, respectively, for the quarter under review.
The Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $214.9 million, long-term debt of $2.19 billion, and total stockholders’ equity of $34 million. It had approximately $1 billion of available capacity under its credit facility at the end of the quarter.
In the quarter, the company registered $67.4 million in net cash from operating activities. The free cash flow was $61.7 million in fourth-quarter 2024.
HBI Announces Exit From Champion Japan License
The company announced its early exit from the Champion Japan license, originally planned as a temporary transition after selling the global Champion business on Sept. 30, 2024. It informed Authentic Brands Group in the fourth quarter that it would exit by the end of 2025, ahead of schedule.
Consequently, Champion Japan was reclassified as discontinued operations. In 2024, the business generated approximately $124 million in net sales and $12 million in adjusted operating profit.
Hanesbrands’ Q1 & 2025 Guidance
For the first quarter of 2025, the company projects net sales from continuing operations of $750 million, including a $15-million foreign currency exchange rate headwind. This represents about a 1% increase from the prior year on a reported basis, with organic constant-currency net sales expected to be consistent with that reported in the previous year.
Operating profit from continuing operations is estimated at $55 million, while adjusted operating profit is expected to be $65 million, excluding $10 million in restructuring and action-related pretax charges. The operating profit outlook includes a projected $1-million foreign currency headwind. Loss per share from continuing operations is projected at 5 cents, while adjusted earnings per share from continuing operations are estimated at 2 cents.
HBI Stock Past Three-Month Performance
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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 expected between $420 million and $440 million, whereas adjusted operating profit is projected between $450 million and $465 million, excluding estimated restructuring and action-related pretax charges of $25-$30 million. The operating profit outlook includes a projected $8-million foreign currency headwind.
Earnings per share from continuing operations are projected between 39 cents and 45 cents, whereas 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 shares have lost 4.6% in the past three months against the industry’s 7.4% growth.
Top 3 Picks
Some better-ranked stocks are Boot Barn Holdings, Inc. BOOT, lululemon athletica inc. LULU and Gildan Activewear Inc. GIL.
Boot Barn is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 21.4% and 14.9%, respectively, from the fiscal 2024 reported levels. BOOT delivered a trailing four-quarter average earnings surprise of 7.2%.
lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. It currently has a Zacks Rank of 2 (Buy). LULU delivered a 6.7% earnings surprise in the last reported quarter.
The consensus estimate for lululemon’s fiscal 2025 earnings and sales indicates growth of 12.5% and 9.7%, respectively, from the fiscal 2024 reported levels. LULU delivered a trailing four-quarter average earnings surprise of 6.7%.
Gildan Activewear is a manufacturer and marketer of premium quality branded basic activewear. It carries a Zacks Rank #2 at present.
The consensus estimate for Gildan Activewear’s 2024 earnings and sales indicates growth of 15.6% and 1.5%, respectively, from the 2023 reported levels. GIL delivered a trailing four-quarter average earnings surprise of 5.4%.
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