We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Hanesbrands (HBI) drops More Than 25% in 3 Months
Read MoreHide Full Article
Hanesbrands Inc. (HBI - Free Report) is grappling with supply chain logistic headwinds. Cost inflation is putting pressure on the consumer goods company’s margin performance. Apart from these, unfavorable foreign currency rates are hurting Hanesbrands. That being said, focus on the Full Potential plan is a tailwind.
Let’s delve deeper.
Image Source: Zacks Investment Research
Factors Hurting Hanesbrands’ Performance
The Zacks Rank #4 (Sell) company is grappling with higher inflation, which affected gross margin performance during the first quarter of 2022. During the quarter, adjusted gross profit came in at $585 million, down from $605 million reported in the year-ago quarter. Adjusted gross margin was 37.1%, down almost 305 basis points (bps) due to the expected impact of increased inflation and more-than-planned strategic investment in expedited freight to support new retail space gains and product innovation. Adjusted operating margin of 11.1% contracted nearly 280 bps, thanks to inflation and expedited freight costs.
In its last earnings call, Hanesbrands highlighted that it has been operating amid a tough global environment for the past three months. The company is grappling with COVID-induced supply chain logistic headwinds. The war in Eastern Europe and inflation, exerting pressure on cost and consumer budgets, are headwinds. In the past three months, management saw escalated challenges in the operating environment globally, resulting in an incremental $65 million of net cost headwinds compared with the previous outlook.
Owing to its international presence, Hanesbrands is exposed to unfavorable currency fluctuations. The weakening of foreign currencies against the U.S. dollar might require the company to either raise prices or contract profit margins in locations outside the country. The unfavorable foreign currency exchange rate was a 200 bps drag on the company’s sales growth during the first quarter of 2022. For the second quarter of 2022, net sales from continuing operations will likely include an adverse impact of $40 million from currency movements. For 2022, net sales from continuing operations are anticipated to reflect a currency headwind of $125 million. Certainly, the volatility in exchange rates is a concern.
Wrapping Up
Hanesbrands is progressing well with its Full Potential plan, which was unveiled in May 2021. The plan includes growing the global Champion brand, reigniting innerwear growth, driving consumer-centricity and focusing on the portfolio. Strength in the company’s Activewear and Innerwear categories are also aiding growth.
That being said, let’s see if these upsides can help the company counter the aforementioned hurdles. HBI’s shares have plunged 25.5% in the past three months compared with the industry’s decline of 7.4%.
Top 3 Picks
Delta Apparel, Inc. , an activewear and lifestyle apparel products company, sports a Zacks Rank #1 (Strong Buy). DLA has a trailing four-quarter earnings surprise of 41.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share (EPS) suggests growth of 14.6% and 45.8%, respectively, from the year-ago period's reported numbers.
G-III Apparel Group, Ltd. (GIII - Free Report) , a women's and men's apparel company, currently carries a Zacks Rank of 2 (Buy). GIII has a trailing four-quarter earnings surprise of 97.5%, on average.
The Zacks Consensus Estimate for G-III Apparel 's current financial-year sales suggests growth of 8.8%, while the same for EPS indicates a rise of 5.4% from the respective year-ago reported figures.
Central Garden & Pet (CENT - Free Report) presently carries a Zacks Rank #2. CENT has a trailing four-quarter earnings surprise of 406%, on average.
The Zacks Consensus Estimate for Central Garden’s current financial-year sales and EPS suggests growth of 4.7% and 7.5% from the year-ago period’s reported numbers, respectively.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Here's Why Hanesbrands (HBI) drops More Than 25% in 3 Months
Hanesbrands Inc. (HBI - Free Report) is grappling with supply chain logistic headwinds. Cost inflation is putting pressure on the consumer goods company’s margin performance. Apart from these, unfavorable foreign currency rates are hurting Hanesbrands. That being said, focus on the Full Potential plan is a tailwind.
Let’s delve deeper.
Image Source: Zacks Investment Research
Factors Hurting Hanesbrands’ Performance
The Zacks Rank #4 (Sell) company is grappling with higher inflation, which affected gross margin performance during the first quarter of 2022. During the quarter, adjusted gross profit came in at $585 million, down from $605 million reported in the year-ago quarter. Adjusted gross margin was 37.1%, down almost 305 basis points (bps) due to the expected impact of increased inflation and more-than-planned strategic investment in expedited freight to support new retail space gains and product innovation. Adjusted operating margin of 11.1% contracted nearly 280 bps, thanks to inflation and expedited freight costs.
In its last earnings call, Hanesbrands highlighted that it has been operating amid a tough global environment for the past three months. The company is grappling with COVID-induced supply chain logistic headwinds. The war in Eastern Europe and inflation, exerting pressure on cost and consumer budgets, are headwinds. In the past three months, management saw escalated challenges in the operating environment globally, resulting in an incremental $65 million of net cost headwinds compared with the previous outlook.
Owing to its international presence, Hanesbrands is exposed to unfavorable currency fluctuations. The weakening of foreign currencies against the U.S. dollar might require the company to either raise prices or contract profit margins in locations outside the country. The unfavorable foreign currency exchange rate was a 200 bps drag on the company’s sales growth during the first quarter of 2022. For the second quarter of 2022, net sales from continuing operations will likely include an adverse impact of $40 million from currency movements. For 2022, net sales from continuing operations are anticipated to reflect a currency headwind of $125 million. Certainly, the volatility in exchange rates is a concern.
Wrapping Up
Hanesbrands is progressing well with its Full Potential plan, which was unveiled in May 2021. The plan includes growing the global Champion brand, reigniting innerwear growth, driving consumer-centricity and focusing on the portfolio. Strength in the company’s Activewear and Innerwear categories are also aiding growth.
That being said, let’s see if these upsides can help the company counter the aforementioned hurdles. HBI’s shares have plunged 25.5% in the past three months compared with the industry’s decline of 7.4%.
Top 3 Picks
Delta Apparel, Inc. , an activewear and lifestyle apparel products company, sports a Zacks Rank #1 (Strong Buy). DLA has a trailing four-quarter earnings surprise of 41.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share (EPS) suggests growth of 14.6% and 45.8%, respectively, from the year-ago period's reported numbers.
G-III Apparel Group, Ltd. (GIII - Free Report) , a women's and men's apparel company, currently carries a Zacks Rank of 2 (Buy). GIII has a trailing four-quarter earnings surprise of 97.5%, on average.
The Zacks Consensus Estimate for G-III Apparel 's current financial-year sales suggests growth of 8.8%, while the same for EPS indicates a rise of 5.4% from the respective year-ago reported figures.
Central Garden & Pet (CENT - Free Report) presently carries a Zacks Rank #2. CENT has a trailing four-quarter earnings surprise of 406%, on average.
The Zacks Consensus Estimate for Central Garden’s current financial-year sales and EPS suggests growth of 4.7% and 7.5% from the year-ago period’s reported numbers, respectively.