Hanesbrands Inc. (HBI - Free Report) is well placed courtesy of its robust growth efforts, which have been boosting investors’ optimism. Notably, shares of the company have surged 40.8% so far this year compared with the industry’s growth of 13.1%. Moreover, the stock has comfortably outperformed the Zacks Consumer Discretionary sector’s increase of 8.8% during the same period.
Let’s delve deeper.
E-commerce Business: A Key Driver
As consumers are increasingly resorting to online shopping, Hanesbrands continues to focus on developing its online sales. In the second quarter of 2020, the company registered global online sales growth of more than 70% via the e-commerce websites, retailer websites, large internet pure-plays and business-to-business customers on a rebased year-over-year comparison. Hanesbrands, which is global partner with Amazon (AMZN - Free Report) , is focused on making incremental investments in its online business to keep pace with consumers’ evolving shopping patterns.
Strength in Protective Gear Business
Hanesbrands has undertaken a number of measures to stay afloat amid the coronavirus crisis. In this regard, the company developed a product line of personal protective garments. The newly-floated business resonates well with the present environment, commercial and consumer demand. Notably, the company sold about $752 million of personal-protection garments worldwide during the second quarter, which is well ahead of expectations. As part of the protective garment sales in the quarter, it delivered more than 450 million cloth face coverings and above 20 million medical gowns to the U.S.government.
Additionally, the company is selling face masks to customers globally under its brand names, including Hanes, Champion, Bonds and Dim. Going ahead, Hanesbrands expects to sell more than $150 million of protective garments in the second half of 2020, mostly in the third quarter. Clearly, the newly-floated protective garments business signifies an ongoing growth opportunity.
Project Booster on Track
Hanesbrands launched a multi-year program in first-quarter 2017 to drive investment for growth, minimize costs as well as increase cash flow. This 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 supplychain scale through acquisitions. Furthermore, the Project Booster cost savings along with other cash flow drivers like synergies from buyouts and diversified revenues bode well.
We believe that such upsides are likely to help this Zacks Rank #1 (Strong Buy) stock to stay in investors’ good books.
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