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Hanesbrands Gains on Online Sales & Protective Gear Business
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Hanesbrands Inc. (HBI - Free Report) looks well-positioned on the back of its robust growth-oriented strategies. In this context, the company’s solid e-commerce business is yielding. Also, Hanesbrands’ cost-saving efforts as well as its protective gear business amid the coronavirus outbreak are yielding.
Analysts are optimistic regarding the company’s performance. The Zacks Consensus Estimate for its 2020 earnings improved by a cent to 61 cents per share in the past 30 days. Shares of Hanesbrands have gained 20.7% in the past three months compared with the industry’s growth of 20.3%.
E-commerce Business: A Key Driver
As consumers are increasingly resorting to online shopping, Hanesbrands remains focused on developing its online sales. In the first quarter of 2020, the company’s total online sales increased 5% globally. Impressively, growth rates at online channels accelerated in the last two weeks of the quarter, which continued in April. Hanesbrands, which is a global partner of Amazon (AMZN - Free Report) , is focused on making incremental investments in its online business to keep pace with consumers’ evolving shopping patterns especially as the coronavirus pandemic has increased digital shopping penetration.
Efforts to Stay Afloat Amid Coronavirus
In an attempt to join the fight against the rapid spread of the novel coronavirus, Hanesbrands is producing cloth face coverings and medical gowns for the U.S. government amid the pandemic. In fact, the company announced on Jul 2 that till now it delivered more than 450 million cloth face coverings along with more than 20 million medical gowns to the U.S. government.
Also, Hanesbrands launched face masks under Hanes and Champion brands. The masks will be available to the public as well as for business-to-business customer orders. The company launched a 3-ply all-cotton face mask, which is reusable, washable and breathable, under the Hanes brand. Further, Hanesbrands has floated a 1-ply polyester-spandex blend face mask under its Champion brand. On its last earnings call, management expected revenues from the new protective gear business to cross $300 million in 2020.
Moreover, Hanesbrands has undertaken actions like preserving cash and strengthening liquidity to deal with the crisis. In this regard, the company has been curbing discretionary and capital spends, managing inventories and temporarily cutting salaries and furloughing certain employee groups. Such temporary pay cuts, furloughs, and lower discretionary spending on media and marketing are likely to save nearly $200 million in 2020.
Project Booster to Aid Growth
Hanesbrands launched a multiyear program in first-quarter 2017 to drive investment for growth, minimize costs and increase cash flow. The program, which is well-positioned for the next five years, aims to boost the company’s Sell More, Spend Less, Generate Cash strategy for additional gains, mainly from the global commercial and supply chain scale through acquisitions. Furthermore, cost savings from the Project Booster along with other cash flow drivers like synergies from buyouts and diversified revenues bode well for the company.
Wrapping Up
Hanesbrands had to temporarily close nearly 1,200 brand stores across the United States, Europe and Australia in the wake of the coronavirus outbreak. This primarily affected its first-quarter 2020 performance, wherein both top and bottom lines deteriorated year over year and lagged the Zacks Consensus Estimate.
Nevertheless, we believe that all aforementioned upsides will continue to help this Zacks Rank #2 (Buy) company stay in investors’ good books.
Crocs (CROX - Free Report) , which carries a Zacks Rank #2 at present, has a long-term earnings growth rate of 15%.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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Hanesbrands Gains on Online Sales & Protective Gear Business
Hanesbrands Inc. (HBI - Free Report) looks well-positioned on the back of its robust growth-oriented strategies. In this context, the company’s solid e-commerce business is yielding. Also, Hanesbrands’ cost-saving efforts as well as its protective gear business amid the coronavirus outbreak are yielding.
Analysts are optimistic regarding the company’s performance. The Zacks Consensus Estimate for its 2020 earnings improved by a cent to 61 cents per share in the past 30 days. Shares of Hanesbrands have gained 20.7% in the past three months compared with the industry’s growth of 20.3%.
E-commerce Business: A Key Driver
As consumers are increasingly resorting to online shopping, Hanesbrands remains focused on developing its online sales. In the first quarter of 2020, the company’s total online sales increased 5% globally. Impressively, growth rates at online channels accelerated in the last two weeks of the quarter, which continued in April. Hanesbrands, which is a global partner of Amazon (AMZN - Free Report) , is focused on making incremental investments in its online business to keep pace with consumers’ evolving shopping patterns especially as the coronavirus pandemic has increased digital shopping penetration.
Efforts to Stay Afloat Amid Coronavirus
In an attempt to join the fight against the rapid spread of the novel coronavirus, Hanesbrands is producing cloth face coverings and medical gowns for the U.S. government amid the pandemic. In fact, the company announced on Jul 2 that till now it delivered more than 450 million cloth face coverings along with more than 20 million medical gowns to the U.S. government.
Also, Hanesbrands launched face masks under Hanes and Champion brands. The masks will be available to the public as well as for business-to-business customer orders. The company launched a 3-ply all-cotton face mask, which is reusable, washable and breathable, under the Hanes brand. Further, Hanesbrands has floated a 1-ply polyester-spandex blend face mask under its Champion brand. On its last earnings call, management expected revenues from the new protective gear business to cross $300 million in 2020.
Moreover, Hanesbrands has undertaken actions like preserving cash and strengthening liquidity to deal with the crisis. In this regard, the company has been curbing discretionary and capital spends, managing inventories and temporarily cutting salaries and furloughing certain employee groups. Such temporary pay cuts, furloughs, and lower discretionary spending on media and marketing are likely to save nearly $200 million in 2020.
Project Booster to Aid Growth
Hanesbrands launched a multiyear program in first-quarter 2017 to drive investment for growth, minimize costs and increase cash flow. The program, which is well-positioned for the next five years, aims to boost the company’s Sell More, Spend Less, Generate Cash strategy for additional gains, mainly from the global commercial and supply chain scale through acquisitions. Furthermore, cost savings from the Project Booster along with other cash flow drivers like synergies from buyouts and diversified revenues bode well for the company.
Wrapping Up
Hanesbrands had to temporarily close nearly 1,200 brand stores across the United States, Europe and Australia in the wake of the coronavirus outbreak. This primarily affected its first-quarter 2020 performance, wherein both top and bottom lines deteriorated year over year and lagged the Zacks Consensus Estimate.
Nevertheless, we believe that all aforementioned upsides will continue to help this Zacks Rank #2 (Buy) company stay in investors’ good books.
Other Top Picks
BJs Wholesale Club (BJ - Free Report) , which currently sports a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 13.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Crocs (CROX - Free Report) , which carries a Zacks Rank #2 at present, has a long-term earnings growth rate of 15%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>