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Hanesbrands (HBI) Q3 Earnings In Line With Estimates, Sales Fall
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Hanesbrands Inc. (HBI - Free Report) reported dismal third-quarter 2022 results, with the top line missing the Zacks Consensus Estimate and the bottom line meeting the same. The metrics decline year over year. Taking into account increased macro-related issues in the global operating environment, management lowered its 2022 guidance and provided fourth-quarter view.
Q3 in Detail
Hanesbrands posted adjusted income from continuing operations of 29 cents a share, in line with the Zacks Consensus Estimate of 29 cents per share. The metric declined from 53 cents reported in the year-ago quarter.
Net sales from continuing operations declined 7% to $1,670.7 million and missed the Zacks Consensus Estimate of $1,753.4 million. The metric includes a $59-million negative impact from foreign exchange rates. On a constant-currency (cc) basis, net sales fell 3%. The downside was caused by a macro-driven slowdown in consumer spending across the United States and certain Asian markets. In addition, soft orders due to U.S. retailers tightly managing overall inventory levels were a downside. That said, innerwear growth across Australia and the Other Americas and Champion growth in Europe offered some respite. Global Champion brand sales fell 14%, with the same declines across the United States and internationally.
Hanesbrands Inc. Price, Consensus and EPS Surprise
Adjusted gross profit came in at $576 million. Adjusted gross margin was 34.5%, down almost 460 basis points (bps) due to impacts of commodity and ocean freight inflation and manufacturing time-out expenses. These were somewhat offset by pricing actions, lower use of air freight and savings from the Full Potential initiative.
Adjusted operating profit came in at $168 million, down $96 million from the third quarter of 2021. Adjusted operating margin of 10% contracted nearly 470 bps.
Segmental Details
Innerwear: Segment sales fell 11% year over year. The downside was a result of macroeconomic pressures, which dented consumer spending and the impact of retailer actions to manage inventory. That said, benefits from the first-quarter price rises and retail space gains offered some respite. Segmental operating margin stood at 16%, down 505 bps.
Activewear: Sales were in line with the year-ago quarter’s level. The company saw continued growth in the collegiate channel as well as impressive growth across the printwear channel for Champion and Hanes brands. These factors were offset by softness in the other channels owing to reduced point-of-sale trends and increased Activewear inventory levels. Segmental operating margin of 11.6% contracted nearly 490 bps.
International: Revenues in the International business declined 6% year over year including $59 million of unfavorable currency headwinds .At cc, International sales rose 5%, fueled by Champion growth across Europe and innerwear growth in Australia and the Other Americas. However, Champion declines in some Asian markets were a headwind. Segmental operating margin stood at 13.9%, down nearly 220 bps.
Other Financial Details
The Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $253.1 million, long-term debt of $3,655.9 million and total stockholders’ equity of $674.9 million. It had roughly $610 million of available capacity under its credit facility at the end of the quarter.
For the quarter that ended Oct 1, 2022, the company used $50.6 million as net cash from operating activities.
Inventory came in at $2.14 billion, up 31% year over year. The company declared a cash dividend of 15 cents per share, payable on Dec 13, 2022, to shareholders of record as on Nov 22. The company has approximately $575 million remaining under its current repurchase authorization.
Image Source: Zacks Investment Research
Guidance
For 2022, net sales from continuing operations are now anticipated to be $6.16-$6.21 billion, which includes an anticipated currency headwind of nearly $196 million. The midpoint of the guidance suggests a 9% year-over-year net sales decline on a reported basis and a nearly 6% fall at cc. Earlier, 2022 net sales from continuing operations were anticipated to be $6.45-$6.55 billion, suggesting a 4% year-over-year net sales decline on a reported basis and a nearly 2% fall at cc at the midpoint.
For 2022, adjusted operating profit from continuing operations is likely to be in the $567-$597 million range for the year, including a currency headwind expectation of roughly $26 million. Earlier, management expected the metric in the $630-$680 million range, including a currency headwind of roughly $22 million. In 2022, Hanesbrands expects to incur charges associated with the Full Potential plan of nearly $55 million. Adjusted earnings per share (EPS) from continuing operations is envisioned to be in the 95 cents to $1.02 range during 2022, down from the previous guidance of $1.11-$1.23.
For fourth-quarter 2022, net sales from continuing operations are expected to be $1.40- $1.45 billion, including a projected headwind of nearly $68 million from currency rates. At the midpoint, the guidance reflects nearly 15% year-over-year net sales growth on a cc basis or down 19% on a reported basis. Adjusted operating profit from continuing operations is expected in the range of $100- $70 million, including a projected headwind of nearly $9 million from currency rates. Adjusted EPS from continuing operations are envisioned in the 4-11 cents range for the fourth quarter.
HBI’s shares have decreased 38.7% in the past three months compared with the industry’s decline of 10.7%.
Other Stocks to Consider
Some other top-ranked companies from the Consumer Discretionary sector are lululemon athletica (LULU - Free Report) , Crocs, Inc. (CROX - Free Report) and G-III Apparel (GIII - Free Report) .
The Zacks Consensus Estimate for lululemon’s current financial year sales and earnings suggests growth of 26.7% and almost 27% from the year-ago period’s reported numbers, respectively.
Crocs currently has a Zacks Rank #2. CROX has a long-term earnings growth rate of 15%. The company has a trailing four-quarter earnings surprise of 18.2%, on average.
The Zacks Consensus Estimate for CROX’s current financial-year sales and earnings suggests growth of 51.5% and almost 23.7% from the year-ago period’s reported numbers, respectively.
G-III Apparel designs, sources and markets apparel and accessories under owned, licensed and private-label brands. The stock currently has a Zacks Rank of 2. GIII has an expected long-term earnings growth rate of 15%.
The Zacks Consensus Estimate for G-III Apparel’s current financial-year revenues suggests growth of 13.7%, from the corresponding year-ago reported figures. G-III Apparel has a trailing four-quarter earnings surprise of 20.8%, on average.
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Hanesbrands (HBI) Q3 Earnings In Line With Estimates, Sales Fall
Hanesbrands Inc. (HBI - Free Report) reported dismal third-quarter 2022 results, with the top line missing the Zacks Consensus Estimate and the bottom line meeting the same. The metrics decline year over year. Taking into account increased macro-related issues in the global operating environment, management lowered its 2022 guidance and provided fourth-quarter view.
Q3 in Detail
Hanesbrands posted adjusted income from continuing operations of 29 cents a share, in line with the Zacks Consensus Estimate of 29 cents per share. The metric declined from 53 cents reported in the year-ago quarter.
Net sales from continuing operations declined 7% to $1,670.7 million and missed the Zacks Consensus Estimate of $1,753.4 million. The metric includes a $59-million negative impact from foreign exchange rates. On a constant-currency (cc) basis, net sales fell 3%. The downside was caused by a macro-driven slowdown in consumer spending across the United States and certain Asian markets. In addition, soft orders due to U.S. retailers tightly managing overall inventory levels were a downside. That said, innerwear growth across Australia and the Other Americas and Champion growth in Europe offered some respite. Global Champion brand sales fell 14%, with the same declines across the United States and internationally.
Hanesbrands Inc. Price, Consensus and EPS Surprise
Hanesbrands Inc. price-consensus-eps-surprise-chart | Hanesbrands Inc. Quote
Adjusted gross profit came in at $576 million. Adjusted gross margin was 34.5%, down almost 460 basis points (bps) due to impacts of commodity and ocean freight inflation and manufacturing time-out expenses. These were somewhat offset by pricing actions, lower use of air freight and savings from the Full Potential initiative.
Adjusted operating profit came in at $168 million, down $96 million from the third quarter of 2021. Adjusted operating margin of 10% contracted nearly 470 bps.
Segmental Details
Innerwear: Segment sales fell 11% year over year. The downside was a result of macroeconomic pressures, which dented consumer spending and the impact of retailer actions to manage inventory. That said, benefits from the first-quarter price rises and retail space gains offered some respite. Segmental operating margin stood at 16%, down 505 bps.
Activewear: Sales were in line with the year-ago quarter’s level. The company saw continued growth in the collegiate channel as well as impressive growth across the printwear channel for Champion and Hanes brands. These factors were offset by softness in the other channels owing to reduced point-of-sale trends and increased Activewear inventory levels. Segmental operating margin of 11.6% contracted nearly 490 bps.
International: Revenues in the International business declined 6% year over year including $59 million of unfavorable currency headwinds .At cc, International sales rose 5%, fueled by Champion growth across Europe and innerwear growth in Australia and the Other Americas. However, Champion declines in some Asian markets were a headwind. Segmental operating margin stood at 13.9%, down nearly 220 bps.
Other Financial Details
The Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $253.1 million, long-term debt of $3,655.9 million and total stockholders’ equity of $674.9 million. It had roughly $610 million of available capacity under its credit facility at the end of the quarter.
For the quarter that ended Oct 1, 2022, the company used $50.6 million as net cash from operating activities.
Inventory came in at $2.14 billion, up 31% year over year. The company declared a cash dividend of 15 cents per share, payable on Dec 13, 2022, to shareholders of record as on Nov 22. The company has approximately $575 million remaining under its current repurchase authorization.
Image Source: Zacks Investment Research
Guidance
For 2022, net sales from continuing operations are now anticipated to be $6.16-$6.21 billion, which includes an anticipated currency headwind of nearly $196 million. The midpoint of the guidance suggests a 9% year-over-year net sales decline on a reported basis and a nearly 6% fall at cc. Earlier, 2022 net sales from continuing operations were anticipated to be $6.45-$6.55 billion, suggesting a 4% year-over-year net sales decline on a reported basis and a nearly 2% fall at cc at the midpoint.
For 2022, adjusted operating profit from continuing operations is likely to be in the $567-$597 million range for the year, including a currency headwind expectation of roughly $26 million. Earlier, management expected the metric in the $630-$680 million range, including a currency headwind of roughly $22 million. In 2022, Hanesbrands expects to incur charges associated with the Full Potential plan of nearly $55 million. Adjusted earnings per share (EPS) from continuing operations is envisioned to be in the 95 cents to $1.02 range during 2022, down from the previous guidance of $1.11-$1.23.
For fourth-quarter 2022, net sales from continuing operations are expected to be $1.40- $1.45 billion, including a projected headwind of nearly $68 million from currency rates. At the midpoint, the guidance reflects nearly 15% year-over-year net sales growth on a cc basis or down 19% on a reported basis. Adjusted operating profit from continuing operations is expected in the range of $100- $70 million, including a projected headwind of nearly $9 million from currency rates. Adjusted EPS from continuing operations are envisioned in the 4-11 cents range for the fourth quarter.
HBI’s shares have decreased 38.7% in the past three months compared with the industry’s decline of 10.7%.
Other Stocks to Consider
Some other top-ranked companies from the Consumer Discretionary sector are lululemon athletica (LULU - Free Report) , Crocs, Inc. (CROX - Free Report) and G-III Apparel (GIII - Free Report) .
lululemon presently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 10.4%, on average. LULU has an expected long-term earnings growth rate of 20%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for lululemon’s current financial year sales and earnings suggests growth of 26.7% and almost 27% from the year-ago period’s reported numbers, respectively.
Crocs currently has a Zacks Rank #2. CROX has a long-term earnings growth rate of 15%. The company has a trailing four-quarter earnings surprise of 18.2%, on average.
The Zacks Consensus Estimate for CROX’s current financial-year sales and earnings suggests growth of 51.5% and almost 23.7% from the year-ago period’s reported numbers, respectively.
G-III Apparel designs, sources and markets apparel and accessories under owned, licensed and private-label brands. The stock currently has a Zacks Rank of 2. GIII has an expected long-term earnings growth rate of 15%.
The Zacks Consensus Estimate for G-III Apparel’s current financial-year revenues suggests growth of 13.7%, from the corresponding year-ago reported figures. G-III Apparel has a trailing four-quarter earnings surprise of 20.8%, on average.