Hanesbrands (HBI) Beats Q3 Earnings Estimates, Hikes View
Zacks Investment Research | Nov 04, 2021 03:28AM ET
Hanesbrands (NYSE:HBI) Inc. industry ’s growth of 25.8%.h3 Q3 in Detail/h3
Hanesbrands has posted adjusted earnings of 53 cents a share, surpassing the Zacks Consensus Estimate of 47 cents. The metric increased from 46 cents and 48 cents reported in third-quarter 2020 and third-quarter 2019, respectively. Net sales rose 5.8% to $1,789.6 million but missed the Zacks Consensus Estimate of $1,798 million. Total constant-currency (cc) net sales increased 5%. This can be attributable to favorable demand and a strong point-of-sale performance in the United States, Europe, Americas and certain Asia markets, which more than offset adverse impacts of the COVID-related lockdowns in Australia and Japan. The top line also grew 11% (up 10% at cc) from third-quarter 2019, driven by solid consumer demand in the global innerwear and activewear businesses, robust point-of-sale performance, and market share gains. The comparisons with 2019 reflect the impacts of the discontinuation of the European Innerwear business, the C9 Champion mass program and the DKNY intimate apparel license. The company’s online sales surged 62% from third-quarter 2019, which includes 50% growth on company-owned websites. This was mainly driven by brand strength across its owned websites, pure-plays and retailer-owned websites. Adjusted gross margin of 39.1% expanded 250 basis points (bps) year over year and improved roughly 65 bps from third-quarter 2019. The uptick can be attributable to cost-saving programs and gains from the business mix, which more than offset the rise in transportation and inflation expenses. Adjusted operating profit of $264 million advanced 9% year over year and 8% from third-quarter 2019. The adjusted operating margin expanded 50 bps to 14.7%, owing to cost-saving programs and gains from the business mix, which more than offset higher marketing investments and cost inflation. Meanwhile, the metric contracted nearly 40 bps from third-quarter 2019 due to increased investments in marketing and cost inflation.
Innerwear: Sales in the U.S. Innerwear segment of $702.6 million declined 11% year over year due to the overlap of PPE sales last year. The metric advanced 25% from third-quarter 2019, with mid to high-single-digit growth in men’s, women’s, kid’s and socks, pent-up consumer demand, strong point-of-sale growth, and market share gains.
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Activewear: Sales in the U.S Activewear segment rallied 42% year over year to $462.5 million on the back of double-digit growth in Champion and Hanes brands, favorable point-of-sale trends in key channels, and pent-up consumer demand. The top line grew 4% from third-quarter 2019, driven by growth across online, wholesale and distributor channels, which somewhat offset the sluggishness in the college bookstore business.
International: Revenues in the International business rose 6% year over year to $536.5 million. Excluding PPE, sales increased 7% on a cc basis, driven by solid demand, particularly in the Americas, Europe and China. The metric rose 4% (up 1% at cc) from third-quarter 2019, owing to sales growth in Australia, Europe and parts of Asia, which more than offset COVID-related woes in Japan and Australia.
h3 Other Financial Details/h3Hanesbrands ended the quarter with cash and cash equivalents of $909.4 million, long-term debt of $3,739.4 million, and total stockholders’ equity of $814 million. For the quarter ended Oct 2, 2021, the company generated $217.2 million as net cash from operating activities. For 2021, cash flow from operating activities is likely to be $550-$600 million, up from the previously mentioned $550 million. Capital expenditure for 2021 is expected to be $75-$85 million. The company revealed plans to redeem its $700 million worth of 5.375% 2025 senior notes, which will result in $35 million of annual savings, out of which $4 million will be generated in fourth-quarter 2021. It also intends to refinance its senior secured credit facility in the fourth quarter.
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