Hanesbrands Q3 Earnings Miss Estimates, Sales Decline Y/Y

Hanesbrands Inc. (HBI) reported third-quarter 2025 results, wherein both top and bottom lines fell short of the Zacks Consensus Estimate. Revenues declined year over year. However, the bottom line improved year over year. Management noted that while sales were affected by a late-quarter shift in replenishment orders at a major U.S. retail partner, underlying demand trends improved throughout the quarter. Retail inventories remain healthy, point-of-sale performance strengthened through the back-to-school period and the Hanes brand continued to gain market share. Cost-savings efforts supported margin expansion. The company remains focused on executing the business and completing the transaction with Gildan.Hanesbrands posted adjusted earnings from continuing operations of 15 cents per share, missing the Zacks Consensus Estimate of 16 cents. The metric increased from 12 cents per share in the year-ago quarter.Hanesbrands Inc. Price, Consensus and EPS Surprise Hanesbrands Inc. price-consensus-eps-surprise-chart | Hanesbrands Inc. QuoteNet sales from continuing operations decreased 1% year over year to $891.7 million and missed the Zacks Consensus Estimate of $901 million. On a constant-currency basis, organic net sales decreased 4.9% compared with the prior year.Hanesbrands’ Margin & Cost DetailsAdjusted gross profit was $364 million, down 3% year over year. The adjusted gross margin was 40.8%, down nearly 80 basis points (bps). Gross profit and the gross margin declined year over year, as unfavorable business and customer mix more than offset reduced input costs and the benefits of cost-savings and productivity initiatives. In particular, higher-than-expected transition services revenues reported in the Other segment created an approximately 160 bps headwind to margins in the quarter.Selling, general and administrative (SG&A) costs were $255.9 million, down 8.4% year over year. As a percentage of net sales, SG&A costs decreased to 28.7% down from 31% in the prior-year quarter. The decline reflects successful cost-saving measures and disciplined expense management.Adjusted operating profit was $116 million, up 3% year over year. Adjusted operating margin was 13%, up 45 bps. This improvement was driven by lower SG&A expenses.Hanesbrands’ Segmental DetailsU.S. Segment: The segment’s net sales decreased 4.5% year over year to $647.5 million, caused by unexpected shifts in ordering patterns at one of the company’s large retail partners, which affected replenishment orders late in the quarter. Despite this near-term sales pressure, unit point-of-sale trends improved sequentially each month, supported by strong performance during the back-to-school season. The company continued to focus on its core growth priorities, expansion into new businesses, product innovation, increased brand investment and incremental programming, which contributed to year-over-year market share gains for the Hanes brand.The segmental operating margin was 22.2%, up almost 20 bps. This improvement was mainly fueled by reduced input costs, cost-saving and productivity initiatives.International Segment: International net sales decreased 8% on a reported basis to $204.4 million, which included a $4 million headwind from unfavorable foreign exchange rates and decreased 6% on a constant-currency basis. By region, constant-currency net sales increased in Japan, driven by strength in the Hanes brand, declined in the Americas due to a challenging macroeconomic environment and decreased in Australia, where strong growth in the Bonds brand across all channels was more than offset by continued weakness in the intimate apparel category.The operating margin of 10.2% decreased 230 bps from the prior year, reflecting reduced sales volume and higher brand investment, which outweighed the benefits of cost-savings initiatives and lower input costs.The Zacks Consensus Estimate of net sales of the U.S. and International segments was pegged at $671.6 million and $209.1 million, respectively, for the quarter under review.HBI’s Financial Snapshot: Cash, Debt & Equity OverviewThis Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $217.6 million, long-term debt of $2.21 billion and total stockholders’ equity of $446.4 million. In the quarter, the company provided $27.6 million in net cash from operating activities. The free cash flow was $22.3 million in the third quarter.Hanesbrands’ GuidanceAs previously announced, HanesBrands has entered into a definitive merger agreement to be acquired by Gildan. In connection with this transaction, the company is no longer providing guidance. However, management indicated that performance to date remains generally consistent with its previously communicated 2025 EPS outlook.HBI’s shares have gained 31.2% in the past three months against the industry’s 10.1% decline.Image Source: Zacks Investment ResearchTop Three PicksVince Holding Corp. (VNCE) provides luxury apparel and accessories in the United States and internationally. It has a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Vince Holding’s current fiscal-year sales and earnings indicates growth of 2% and 215.8%, respectively, from the year-ago reported figures. VNCE delivered an earnings surprise of 215.3% in the trailing four quarters, on average.Ralph Lauren Corporation (RL) designs, markets and distributes lifestyle products in North America, Europe, Asia and internationally. It currently carries a Zacks Rank #2 (Buy). Ralph Lauren delivered a trailing four-quarter average earnings surprise of 8.5%.The Zacks Consensus Estimate for RL’s current fiscal-year sales and earnings indicates growth of 7% and 21.7%, respectively, from the year-ago reported figures. Revolve Group, Inc. (RVLV) operates as an online fashion retailer for millennial and Generation Z consumers in the United States and internationally. It carries a Zacks Rank #2 at present. Revolve Group delivered a trailing four-quarter average earnings surprise of 61.7%.The Zacks Consensus Estimate for RVLV’s current fiscal-year revenues implies growth of 6.8% from the year-ago actuals.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ralph Lauren Corporation (RL): Free Stock Analysis Report Hanesbrands Inc. (HBI): Free Stock Analysis Report Vince Holding Corp. (VNCE): Free Stock Analysis Report Revolve Group, Inc. (RVLV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks