Yahoo Finance Hanesbrands (HBI) Q4 Earnings Miss Estimates, Sales Fall Y/Y
Hanesbrands Inc. HBI reported mixed fourth-quarter 2022 results, with the top line beating the Zacks Consensus Estimate and the bottom line missing the same. Both metrics declined year over year. The company posted adjusted income from continuing operations of 7 cents a share, missing the Zacks Consensus Estimate by a penny. The metric declined from 44 cents reported in the year-ago quarter.
Q4 in Detail
Net sales from continuing operations declined 16% to $1,473.3 million but came above the Zacks Consensus Estimate of $1,461 million. The metric includes a $55-million negative impact from foreign exchange rates. On a constant-currency (cc) basis, net sales fell 13%. The downside was caused by a macro-driven slowdown in consumer spending across the United States and certain international markets. In addition, the impact in orders in the United States from the retailers’ decisions to minimize inventory. Global Champion brand sales tumbled 18%, with a decline of 21% and 13% across the United States and internationally, respectively.
Adjusted gross profit came in at $504.9 million. Adjusted gross margin was 34.3%, down almost 415 basis points (bps) due to impacts of commodity and ocean freight inflation and manufacturing time-out expenses. These were somewhat offset by pricing actions, lower air freight use and savings from the Full Potential initiative.
Adjusted operating profit came in at $83 million, down from $220 million in the fourth quarter of 2021. Adjusted operating margin of 5.6% contracted nearly 695 bps.
Hanesbrands Inc. Price, Consensus and EPS Surprise
Hanesbrands Inc. price-consensus-eps-surprise-chart | Hanesbrands Inc. Quote
Segmental Details
Innerwear: Segment sales fell 19% year over year. The downside was a result of macroeconomic pressures, which dented consumer spending and the persistent impacts of replenishment orders to minimize broader inventory positions. However, benefits from the first-quarter price rises and retail space gains offered some respite. Segmental operating margin was 8.3%, down 860 bps.
Activewear: Sales decreased 16% from the year-ago quarter’s level. The company saw continued growth in the collegiate channel across the Champion and Hanes brands. These factors were offset by softness in the other channels owing to reduced point-of-sale trends and increased Activewear inventory levels. The segmental operating margin of 7.5% contracted nearly 550 bps.
International: Revenues in the International business declined 12% year over year including $55 million of unfavorable currency headwinds. At cc, International sales dipped 2%, as increases in Asia were offset by the declines in Australia, the Americas, Europe and Canada. Segmental operating margin stood at 14.2%, down nearly 490 bps.
Other Financial Details
The Zacks Rank #2 (Buy) company ended the quarter with cash and cash equivalents of $238.4 million, long-term debt of $3,612.1 million and total stockholders’ equity of $398.3 million. It had roughly $690 million of available capacity under its credit facility at the end of the quarter.
For the quarter that ended Oct 1, 2022, the company used $358.8 million as net cash from operating activities.
Inventory came in at $1.98 billion, up 25% year over year. The company paid dividends of $209.3 million and repurchased shares of $25.1 million in 2022.
Guidance
For 2023, net sales from continuing operations are now anticipated to be $6.05-$6.20 billion, including an anticipated currency headwind of nearly $42 million. The midpoint of the guidance suggests a 2% year-over-year net sales decline on a reported basis and a nearly 1% fall at cc.
For 2023, adjusted operating profit from continuing operations is likely to be in the $500-$550 million range, including a currency headwind expectation of roughly $6 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 cents to 42 cents range during 2023.
For the year, it expects cash flow from operations of $500 million and capital investments of roughly $150 million.
For first-quarter 2023, net sales from continuing operations are expected to be $1.35-$1.40 billion, including a projected headwind of nearly $35 million from currency rates. At the midpoint, the guidance reflects nearly an 11% year-over-year net sales decline on a cc basis or down 13% on a reported basis. Adjusted operating profit from continuing operations is expected in the range of $50-$70 million, including a projected headwind of nearly $4 million from currency rates. Adjusted loss per share from continuing operations is envisioned in the 4-9 cents range for the first quarter. Hanesbrands expects to incur charges associated with the Full Potential plan of nearly $17 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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