Lower gas prices, an improving job scenario and increasing consumer confidence helped the consumer sector make a strong start to fiscal 2016.Energy prices have bounced from a near-term bottom, but are still at low levels. Moreover, in spite of being a cautious shopper, consumers have reduced their debts and have started to spend more, which is proving beneficial for these companies.

Within the consumer discretionary sector, the athleisure category has been gaining steam lately, mainly because of the rising popularity of casual clothing at work. More and more customers are resorting to the sportswear-meets-street wear blend which has pushed up sales of these stocks. While we gear up for another earnings season, it is time to look for stocks that are poised to do well in the quarterly release.

One such intriguing athleisure stock for investors is Hanesbrands Inc. (HBI Quick QuoteHBI - Free Report) .

Why Is Hanesbrands a Good Choice?

Rank and Estimates: Hanesbrands – a Zacks Rank #2 (Buy) stock – has seen 4 out of 6 estimates moving upward for fiscal 2016 over the past 30 days.

Quarterly Results and Outlook: Hanesbrands has been posting decent results over the past few quarters on the back of strategic acquisitions and the success of the Innovate-to-Elevate strategy. Strong sales in most of its segments, especially Activewear and International, help the company boost its top line.

During the recently concluded first quarter, earnings of $0.26 surpassed the Zacks Consensus Estimate by 18.18%. Earnings also improved 18% year over year on the success of the Innovate-to-Elevate strategy. Higher sales in Innerwear and Activewear categories and contributions from the Knights Apparel business led to sales growth of 1% year over year.

Meanwhile, the company raised its earnings and sales guidance for 2016 based on expectations of increased synergies from pending acquisitions and debt refinancing. The company now expects adjusted earnings for fiscal 2016 in the range of $1.89 to $1.95, up from the previous guidance of $1.85 to $1.91. The company has also raised its sales guidance to $6.15 billion to $6.25 billion, from the previous $5.8 billion to $5.9 billion.

Innovate-to-Elevate Strategy: The Innovate-to-Elevate strategy, focused on providing value-added and high-margin items at lower costs, helps the company boost its margins. Hanesbrands plans to apply this strategy on its core products to boost volume.

Further, the company plans to extend its innovation to the new line of apparels – X-temp – launched during fall last year. These initiatives are expected to drive sales and volume, going ahead.

Portfolio and Industry Leadership: Hanesbrands boasts well-recognized flagship brands like Hanes, Champion, Playtex and Bali, which reinforce its well established position in the industry. The company’s customer-specific programs, such as C9 and Just My Size, at stores like Target and Wal-Mart, are much in demand. Hanesbrands’ flagship brand — Hanes — commands a major market share in the intimate apparel sector.

The company is focusing more on its core products and is geared to balance it with right proportion of promotion, media and innovation. During the first quarter of fiscal 2016, the company began rebalancing marketing features to drive core product sales, which boosted top-line growth to a meaningful extent.

Product Nature: Sale of basic apparel is primarily based on replenishment and not on fashion. This ensures consistency and fewer markdowns since it is an essential commodity and does not conform much to the changing fashion trends. Moreover, in case of basic apparels, people usually return to the brand they use which ensures a group of loyal customers.

Other Key Picks

Other favorably ranked retail stocks include Delta Apparel Inc.(DLA Quick QuoteDLA - Free Report) , Carters Inc. (CRI Quick QuoteCRI - Free Report) and Perry Ellis International Inc. Delta Apparel sports a Zacks Rank #1 (Strong Buy), while Carters and Perry Ellis International hold a Zacks Rank #2 (Buy).

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