On November 7, 2024, Hanesbrands Inc (HBI, Financial) released its 8-K filing detailing its third-quarter 2024 financial results. The company, known for its iconic apparel brands such as Hanes, Playtex, and Maidenform, reported results that exceeded expectations, raising its full-year and fourth-quarter outlook for operating profit, earnings per share (EPS), and cash flow.
Performance Overview and Strategic Initiatives
Hanesbrands Inc (HBI, Financial) reported net sales of $937 million, a slight decrease of 2.5% compared to the previous year. However, on an organic constant currency basis, net sales remained consistent with the prior year. The company achieved a GAAP gross margin of 41.7%, a significant increase of 530 basis points from the previous year, driven by lower input costs and cost-saving initiatives.
The company has been actively restructuring to improve its cost structure and operational efficiencies. This includes reducing corporate headcount and overhead, which is expected to continue yielding benefits in the coming quarters. Hanesbrands also completed the sale of its global Champion business, which is part of its strategy to pay down approximately $1 billion of debt in the second half of 2024.
Financial Achievements and Industry Impact
Hanesbrands Inc (HBI, Financial) reported a GAAP operating profit of $103 million, a 27% increase from the previous year, with an operating margin of 11.0%. Adjusted operating profit rose by 46% to $122 million, with an adjusted operating margin of 13.0%. These improvements are crucial for the apparel manufacturing industry, where maintaining competitive margins is essential amidst fluctuating input costs and market dynamics.
Key Financial Metrics and Analysis
The company's cash flow from operations was $92 million for the quarter, contributing to a year-to-date total of $197 million. Hanesbrands reduced its leverage to 4.3 times net debt-to-adjusted EBITDA, a significant improvement from the previous year. The effective tax rate for the quarter was 27.9%, down from 139.1% in the third quarter of 2023, reflecting better tax management and restructuring benefits.
We delivered another strong quarter with operating profit, earnings per share, and cash flow results that exceeded our expectations," said Steve Bratspies, CEO. "Our strategic actions to create a more focused, simplified business are working."
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Net Sales | $937 million | $961 million | -2.5% |
| Gross Profit | $390 million | $350 million | 11.6% |
| Operating Profit | $103 million | $81 million | 27.1% |
| EPS (Diluted) | $0.09 | $(0.02) | 550% |
Conclusion and Outlook
Hanesbrands Inc (HBI, Financial) has demonstrated resilience and strategic foresight in navigating a challenging market environment. By focusing on cost efficiencies and strategic divestitures, the company is well-positioned to achieve its revised financial targets. The apparel industry continues to face headwinds, but Hanesbrands' proactive measures and strong brand portfolio provide a solid foundation for future growth.
Explore the complete 8-K earnings release (here) from Hanesbrands Inc for further details.
