Yahoo Finance Hanesbrands (HBI) Q1 Earnings Meet Estimates, Sales Fall Y/Y
Hanesbrands Inc. HBI reported mixed first-quarter 2023 results, with the top line beating the Zacks Consensus Estimate and the bottom line matching the same. Both metrics declined year over year. The company posted an adjusted loss from continuing operations of 6 cents a share, which matched the Zacks Consensus Estimate. The metric declined from 34 cents per share earned in the year-ago quarter.
Q1 in Detail
Net sales from continuing operations declined 11.8% to $1,389.4 million but came above the Zacks Consensus Estimate of $1,375 million. The metric includes a $31 million negative impact from foreign exchange rates. On a constant-currency (cc) basis, net sales fell 10%. The downside was caused by a macro-driven slowdown in consumer spending across the United States and Australia.
Global Champion brand sales tumbled 17%, with a decline of 22% across the United States and a 12% fall internationally. At cc, Global Champion brand sales fell 15%, with a 7% decline internationally.
Hanesbrands Inc. Price, Consensus and EPS Surprise
Hanesbrands Inc. price-consensus-eps-surprise-chart | Hanesbrands Inc. Quote
Adjusted gross profit came in at $454.2 million. The adjusted gross margin was 32.7%, down 440 basis points (bps) due to impacts of commodity and ocean freight inflation coupled with lower sales, adverse product mix and increased labor rates. These were somewhat offset by innerwear pricing actions, lower air freight costs and savings from the Full Potential initiative.
Adjusted operating profit came in at $63.4 million, down from $67.3 million in the first quarter of 2022.
Segmental Details
Innerwear: The segment’s sales fell 4% year over year. The downside was a result of macroeconomic pressures, which dented consumer spending and more than offset the partial quarter gains from last year’s mid-quarter price rise. The segmental operating margin was 13.1%, down 450 bps.
Activewear: Sales decreased 19% from the year-ago quarter’s level, driven by the slowdown in consumer spending, which led to lower point-of-sale and increased inventory levels at retail. By channel, sturdy growth in the collegiate channel was more than offset by decreases in the other channels, particularly in printwear. By brand, Champion sales within the Activewear segment plunged 19% year over year, while sales of other activewear brands slipped 19%. The segmental operating margin of 3.2% contracted nearly 950 bps.
International: Revenues in the International business declined 9% year over year. This included $31 million of unfavorable currency headwinds. At cc, International sales dipped 3%, as increases in Europe, the Americas and Japan were offset by a fall in Australia and China. The segmental operating margin stood at 11.1%, down nearly 645 bps.
Other Financial Details
The Zacks Rank #4 (Sell) company ended the quarter with cash and cash equivalents of $213.2 million, long-term debt of $3,588.9 million and total stockholders’ equity of $339.5 million. It had roughly $730 million of available capacity under its credit facility at the end of the quarter.
For the quarter that ended Apr 1, 2023, the company provided $45 million in net cash from operating activities. Free cash flow was $20 million in the first quarter. Inventory came in at $1,969.1 million, down 1% year over year.
2023 Guidance
For 2023, net sales from continuing operations are still anticipated to be $6.05-$6.20 billion, including an anticipated currency headwind of nearly $40 million. The midpoint of the guidance suggests a 2% year-over-year decline on a reported basis and a nearly 1% fall at cc.
Adjusted operating profit from continuing operations is likely to be in the $500-$550 million range, including a currency headwind expectation of roughly $5 million. In 2023, Hanesbrands expects to incur charges associated with the Full Potential plan of nearly $54 million. Adjusted earnings per share (EPS) from continuing operations is envisioned to be in the 31-42 cents range. Cash flow from operations is forecast to be $500 million while capital investments are estimated to be nearly $150 million.
For second-quarter 2023, net sales from continuing operations are expected to be $1.42-$1.47 billion, including a projected headwind of nearly $20 million from currency rates. At the midpoint, the guidance reflects nearly a 3% year-over-year net sales decline on a cc basis or a 5% decline on a reported basis.
Adjusted operating profit from continuing operations is expected in the range of $70-$90 million, including a projected headwind of nearly $3 million from currency rates. Adjusted loss per share from continuing operations is envisioned in the 5 cents to break even. Hanesbrands expects to incur charges associated with the Full Potential plan of nearly $15 million in the same quarter.
HBI’s shares have increased 30.2% in the past three months compared with the industry’s 19.7% growth.
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Ralph Lauren, a footwear and accessories dealer, sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
RL has a trailing four-quarter earnings surprise of 23.6%, on average. The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and EPS suggests growth of 5.5% and 14%, respectively, from the year-ago corresponding figures.
Oxford Industries, which designs, sources, markets and distributes lifestyle products and other brands, carries a Zacks Rank #2 (Buy). Oxford Industries has a trailing four-quarter earnings surprise of 18.9%, on average.
The Zacks Consensus Estimate for OXM’s current financial-year sales and EPS suggests growth of 13.7% and 10.4% from the year-ago reported numbers.
Deckers, a footwear dealer, has a Zacks Rank of 2 at present. DECK has a trailing four-quarter earnings surprise of 31%, on average.
The Zacks Consensus Estimate for Deckers’ current financial-year sales and EPS suggests growth of 11% and 17.1%, respectively, from the year-ago corresponding figures.
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