HanesBrands, a global leader in iconic apparel brands, has reported strong third-quarter 2024 results, exceeding expectations in several key financial metrics. The company achieved net sales of $937 million, which was in line with prior guidance on an organic constant currency basis, and reported significant improvements in operating profit, earnings per share (EPS), and cash flow. HanesBrands has raised its full-year 2024 outlook, driven by its year-to-date performance and confidence in continued margin improvement.

Key financial highlights

- Net Sales: $937 million, stable year-over-year on an organic constant currency basis.

- Gross Profit: $390 million, an increase of 12% year-over-year, driven by lower input costs and the benefits of cost savings initiatives.

- Gross Margin: 41.7%, an increase of 530 basis points compared to Q3 2023.

- Operating Profit: $103 million, up 27% from the previous year, with operating margin increasing by 255 basis points to 11.0%.

- EPS: GAAP EPS of $0.09, a significant improvement from a loss of $(0.02) per share in Q3 2023. Adjusted EPS increased 850% to $0.15.

- Cash Flow: Generated $92 million in operating cash flow for the quarter, and $197 million year-to-date, demonstrating strong liquidity and operational efficiency.

- Leverage: Reduced net debt-to-adjusted EBITDA ratio to 4.3x, down 1.2x from the prior year.

CEO Steve Bratspies attributed the strong performance to the company’s strategic actions aimed at simplifying its business, driving operational efficiencies, and reducing inventory levels. “We are seeing a step-function change in our cost structure, and these actions are positioning us for continued growth in the coming quarters,” Bratspies said.

Strategic restructuring and cost-saving initiatives

During the quarter, HanesBrands continued to implement its strategic restructuring, focusing on consolidating operations, optimizing its supply chain, and lowering fixed costs. The company’s efforts to reduce corporate headcount and overhead have helped fund increased investments in its brands, particularly in its flagship Hanes, Maidenform, and Bali lines. These investments, combined with operational improvements, contributed to a 55% increase in brand investments year-over-year.

The company’s gross margin improvement was also driven by favourable product mix, lower input costs as inflationary pressures eased, and the successful implementation of its assortment management initiatives. Adjusted gross margin increased to 41.8%, a 525-basis point improvement from the same period last year.

International growth and U.S. performance

HanesBrands saw solid performance in its international markets, with net sales increasing 1% on a reported basis, and 4% on a constant currency basis. The company experienced growth in the Americas and Asia, with consistent sales in Australia, as the region begins to recover from macroeconomic challenges.

In the U.S., net sales declined by 1%, largely due to an overall market downturn. However, HanesBrands’ consumer-centric approach and increased brand investments led to market share gains, particularly among younger consumers. The company’s operating margin in the U.S. rose sharply by 665 basis points to 22.1%, aided by lower input costs and higher-margin product mix.

Debt reduction and liquidity position

The company’s liquidity remains strong, with $1.4 billion in total liquidity, including $317 million in cash and equivalents. HanesBrands is on track to pay down approximately $1 billion of debt in the second half of 2024, including a substantial portion of its debt from the recent sale of its global Champion business to Authentic Brands Group. As of October 2024, HanesBrands had already reduced its debt by $870 million.

Updated full-year Outlook

For the full year 2024, HanesBrands has raised its guidance for operating profit, adjusted EPS, and cash flow. The company expects net sales to reach approximately $3.61 billion, a 4% decrease year-over-year on a reported basis, but a more modest 2% decline on an organic constant currency basis. The company anticipates full year adjusted operating profit of approximately $417 million, with a projected adjusted EPS of $0.39.

For the fourth quarter of 2024, HanesBrands expects net sales of around $900 million, with a 3% increase on an organic constant currency basis. The company forecasts adjusted EPS of $0.14 for the fourth quarter and expects to generate approximately $250 million in cash flow from operations.

Conclusion

HanesBrands' third-quarter results demonstrate the effectiveness of its strategic initiatives, with strong earnings growth, margin improvements, and continued progress in debt reduction. The company’s focus on operational efficiencies, cost management, and targeted investments in its core brands has positioned it well for continued growth through 2025. With strong cash flow, reduced leverage, and a healthy liquidity position, HanesBrands is on track to meet its long-term financial objectives.

www.hanes.com