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Hanesbrands Inc. (HBI - Free Report) reported third-quarter 2020 results, with the top and bottom line outpacing the Zacks Consensus Estimate. However, sales and earnings declined year over year.
Q3 in Detail
Hanesbrands posted adjusted earnings of 42 cents a share that surpassed the Zacks Consensus Estimate of 36 cents. However, the metric declined 11% year over year.
Net sales fell 3.1% to $1,808.3 million but outpaced the Zacks Consensus Estimate of $1,604.4 million. On an adjusted basis, the metric rose 3.4%. Excluding the exited programs and foreign-exchange fluctuations, total constant-currency (cc) net sales increased 2.6%.
Notably, apparel sales trends improved sequentially across all business segments. Also, global sales of Champion increased significantly from the prior quarter as consumer demand remains solid. The company registered online sales growth of approximately 70% on a rebased basis via its e-commerce websites, retailer websites, business-to-business customers and large internet pure-plays. Moreover, Hanesbrands sold personal protective garments worth $179 million worldwide.
Moving on, adjusted operating profit declined 9% to $227 million.
Hanesbrands Inc. Price, Consensus and EPS Surprise
Innerwear: Excluding protective garment, U.S. Innerwear sales increased 8.4% on the back of growth in the basics and intimate apparel businesses. Overall U.S. Innerwear revenues surged 37% led by sales of protective garments, continued favorable point-of-sale trends as well as inventory restocking.
When compared with the prior-year quarter’s rebased sales figure to reflect the exit of the C9 Champion mass program as well as the DKNY intimate apparel license, revenues increased 11.5% on excluding protective garments. Overall this metric surged 41%.
Activewear: Sales in U.S. Activewear business declined 41%. When compared with the prior-year quarter’s rebased sales figure to reflect the exit of the C9 Champion program, the metric fell 27%.
International: Sales in the segment fell 5% on a reported basis (down 7% at cc). Excluding the protective garment sales, revenues declined 7%.
Other Financial Details
Hanesbrands ended the quarter with cash and cash equivalents of $731.5 million, long-term debt of $3,972.2 million and stockholders’ equity of $1,149.5 million. In the third quarter, the company generated operating cash flow of $249 million.
Q4 Outlook
For the fourth quarter of 2020, net sales are anticipated in the range of $1.60-$1.66 billion. This projection includes nearly $50 million of protective garment sales and almost $10 million in foreign exchange benefit. The midpoint of guidance represents a net sales decline of 7% year over year. When the mid-point of guidance is compared with rebased figures to reflect exits of the C9 Champion and DKNY programs, fourth-quarter sales are likely to fall 2%.
Further, management expects gross and operating margins to be affected by negative manufacturing variances and escalated SG&A expense in the fourth quarter. Adjusted operating profit is likely to be in the range of $160-$180 million.
Also, adjusted earnings per share (EPS) are envisioned in the band of 25-30 cents in the quarter. When the mid-point of guidance is compared with rebased figures to reflect exits of the C9 Champion and DKNY programs, fourth-quarter adjusted EPS are likely to decline 39%.
Price Performance
In the year-to-date period, shares of this Zacks Rank #1 (Strong Buy) company have gained 10.3% against the industry’s decline of 9.1%.
V.F. Corporation (VFC - Free Report) , with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 9.1%.
Gildan Activewear (GIL - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 5.4%.
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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Hanesbrands' (HBI) Q3 Earnings & Sales Surpass Estimates
Hanesbrands Inc. (HBI - Free Report) reported third-quarter 2020 results, with the top and bottom line outpacing the Zacks Consensus Estimate. However, sales and earnings declined year over year.
Q3 in Detail
Hanesbrands posted adjusted earnings of 42 cents a share that surpassed the Zacks Consensus Estimate of 36 cents. However, the metric declined 11% year over year.
Net sales fell 3.1% to $1,808.3 million but outpaced the Zacks Consensus Estimate of $1,604.4 million. On an adjusted basis, the metric rose 3.4%. Excluding the exited programs and foreign-exchange fluctuations, total constant-currency (cc) net sales increased 2.6%.
Notably, apparel sales trends improved sequentially across all business segments. Also, global sales of Champion increased significantly from the prior quarter as consumer demand remains solid. The company registered online sales growth of approximately 70% on a rebased basis via its e-commerce websites, retailer websites, business-to-business customers and large internet pure-plays. Moreover, Hanesbrands sold personal protective garments worth $179 million worldwide.
Moving on, adjusted operating profit declined 9% to $227 million.
Hanesbrands Inc. Price, Consensus and EPS Surprise
Hanesbrands Inc. price-consensus-eps-surprise-chart | Hanesbrands Inc. Quote
Segment Details
Innerwear: Excluding protective garment, U.S. Innerwear sales increased 8.4% on the back of growth in the basics and intimate apparel businesses. Overall U.S. Innerwear revenues surged 37% led by sales of protective garments, continued favorable point-of-sale trends as well as inventory restocking.
When compared with the prior-year quarter’s rebased sales figure to reflect the exit of the C9 Champion mass program as well as the DKNY intimate apparel license, revenues increased 11.5% on excluding protective garments. Overall this metric surged 41%.
Activewear: Sales in U.S. Activewear business declined 41%. When compared with the prior-year quarter’s rebased sales figure to reflect the exit of the C9 Champion program, the metric fell 27%.
International: Sales in the segment fell 5% on a reported basis (down 7% at cc). Excluding the protective garment sales, revenues declined 7%.
Other Financial Details
Hanesbrands ended the quarter with cash and cash equivalents of $731.5 million, long-term debt of $3,972.2 million and stockholders’ equity of $1,149.5 million. In the third quarter, the company generated operating cash flow of $249 million.
Q4 Outlook
For the fourth quarter of 2020, net sales are anticipated in the range of $1.60-$1.66 billion. This projection includes nearly $50 million of protective garment sales and almost $10 million in foreign exchange benefit. The midpoint of guidance represents a net sales decline of 7% year over year. When the mid-point of guidance is compared with rebased figures to reflect exits of the C9 Champion and DKNY programs, fourth-quarter sales are likely to fall 2%.
Further, management expects gross and operating margins to be affected by negative manufacturing variances and escalated SG&A expense in the fourth quarter. Adjusted operating profit is likely to be in the range of $160-$180 million.
Also, adjusted earnings per share (EPS) are envisioned in the band of 25-30 cents in the quarter. When the mid-point of guidance is compared with rebased figures to reflect exits of the C9 Champion and DKNY programs, fourth-quarter adjusted EPS are likely to decline 39%.
Price Performance
In the year-to-date period, shares of this Zacks Rank #1 (Strong Buy) company have gained 10.3% against the industry’s decline of 9.1%.
Other Top Picks
Crocs’ (CROX - Free Report) bottom line has outpaced the consensus mark significantly in the trailing four quarters, on average. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
V.F. Corporation (VFC - Free Report) , with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 9.1%.
Gildan Activewear (GIL - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 5.4%.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>