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What Does HanesBrands' Sale of Champion Mean for its Future?
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HanesBrands Inc. (HBI - Free Report) has completed the sale of its global Champion business to Authentic Brands Group. This move is a key step in the company’s plan to simplify operations and focus on its core apparel lines. The sale positions HanesBrands to pay down approximately $1 billion in debt in the second half of 2024. With a clear focus and reduced financial burden, HanesBrands aims to boost shareholder returns through revenue growth, improved margins and double-digit earnings per share growth in the coming years.
Debt Reduction Sets the Stage for Growth
With the sale complete, HanesBrands is banking on internal cash generation and balance sheet deleveraging to create stronger financials. The company is optimistic about sustainable growth in the coming years, benefiting from the streamlined focus and healthier balance sheet. The sale of Champion business paves the way for HBI to achieve long-term profitability and value for its shareholders.
Image Source: Zacks Investment Research
What Else Should You Know About HanesBrands?
Hanesbrands’ foundational financial model has been robust, characterized by healthy margins and steady cash generation. In the past three years, the company has taken necessary actions across the business to enhance its operating and financial models. These include developing new capabilities in brand building, data analytics, inventory management and SKU discipline. Also, gross margins have returned to historical levels.
In the second quarter of 2024, the adjusted gross margin was 39.8%, up nearly 525 basis points, driven by reduced input costs, as the company continues to benefit from the effects of peak inflation receding and ongoing cost-saving measures. Gains from the cost-saving initiatives and the impact of the business mix also contributed to the upside. We believe that the abovementioned actions are likely to drive strong earnings growth along with expanding gross and operating margins in the second half of the year.
HanesBrands’ global consumer-centric approach is helping the company to gain market shares, driven by innovation, targeted at a younger consumer demographic and the successful expansion of permanent retail space. The company has strong visibility into new product launches and brand initiatives extending through 2026 with its innovation strategy. The growth in the innerwear segment was fueled by increased marketing investments and product innovation with strong performance from the Hanes Originals and Maidenform M product lines. The company also launched Bali Breathe, making the brand’s most significant innovation in a decade.
Final Words on HBI
In conclusion, HanesBrands' sale of the Champion business is a strategic move that will help the company simplify its operations and reduce debt. With a healthier balance sheet and a clear focus on its core brands, HanesBrands is positioned for strong growth. As HBI continues to benefit from cost-saving initiatives and margin expansion, the company is well on its way to delivering long-term profitability and increased value for its shareholders.
Shares of this Zacks Rank #3 (Hold) company have gained 53.1% in the past three months compared with the industry’s growth of 7%.
Top Three Picks
G-III Apparel Group (GIII - Free Report) is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII Apparel has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Crocs (CROX - Free Report) develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 14.9%, on average. The Zacks Consensus Estimate for Crocs’ current financial-year sales and earnings implies an improvement of 4% and 6.8%, respectively, from the prior-year actuals.
Royal Caribbean (RCL - Free Report) carries a Zacks Rank # 2 at present. RCL has a trailing four-quarter earnings surprise of 18.5%, on average. The Zacks Consensus Estimate for RCL’s 2024 sales and earnings indicates an increase of 18.2% and 70.9%, respectively, from the year-ago levels.
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What Does HanesBrands' Sale of Champion Mean for its Future?
HanesBrands Inc. (HBI - Free Report) has completed the sale of its global Champion business to Authentic Brands Group. This move is a key step in the company’s plan to simplify operations and focus on its core apparel lines. The sale positions HanesBrands to pay down approximately $1 billion in debt in the second half of 2024. With a clear focus and reduced financial burden, HanesBrands aims to boost shareholder returns through revenue growth, improved margins and double-digit earnings per share growth in the coming years.
Debt Reduction Sets the Stage for Growth
With the sale complete, HanesBrands is banking on internal cash generation and balance sheet deleveraging to create stronger financials. The company is optimistic about sustainable growth in the coming years, benefiting from the streamlined focus and healthier balance sheet. The sale of Champion business paves the way for HBI to achieve long-term profitability and value for its shareholders.
Image Source: Zacks Investment Research
What Else Should You Know About HanesBrands?
Hanesbrands’ foundational financial model has been robust, characterized by healthy margins and steady cash generation. In the past three years, the company has taken necessary actions across the business to enhance its operating and financial models. These include developing new capabilities in brand building, data analytics, inventory management and SKU discipline. Also, gross margins have returned to historical levels.
In the second quarter of 2024, the adjusted gross margin was 39.8%, up nearly 525 basis points, driven by reduced input costs, as the company continues to benefit from the effects of peak inflation receding and ongoing cost-saving measures. Gains from the cost-saving initiatives and the impact of the business mix also contributed to the upside. We believe that the abovementioned actions are likely to drive strong earnings growth along with expanding gross and operating margins in the second half of the year.
HanesBrands’ global consumer-centric approach is helping the company to gain market shares, driven by innovation, targeted at a younger consumer demographic and the successful expansion of permanent retail space. The company has strong visibility into new product launches and brand initiatives extending through 2026 with its innovation strategy. The growth in the innerwear segment was fueled by increased marketing investments and product innovation with strong performance from the Hanes Originals and Maidenform M product lines. The company also launched Bali Breathe, making the brand’s most significant innovation in a decade.
Final Words on HBI
In conclusion, HanesBrands' sale of the Champion business is a strategic move that will help the company simplify its operations and reduce debt. With a healthier balance sheet and a clear focus on its core brands, HanesBrands is positioned for strong growth. As HBI continues to benefit from cost-saving initiatives and margin expansion, the company is well on its way to delivering long-term profitability and increased value for its shareholders.
Shares of this Zacks Rank #3 (Hold) company have gained 53.1% in the past three months compared with the industry’s growth of 7%.
Top Three Picks
G-III Apparel Group (GIII - Free Report) is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII Apparel has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Crocs (CROX - Free Report) develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 14.9%, on average. The Zacks Consensus Estimate for Crocs’ current financial-year sales and earnings implies an improvement of 4% and 6.8%, respectively, from the prior-year actuals.
Royal Caribbean (RCL - Free Report) carries a Zacks Rank # 2 at present. RCL has a trailing four-quarter earnings surprise of 18.5%, on average. The Zacks Consensus Estimate for RCL’s 2024 sales and earnings indicates an increase of 18.2% and 70.9%, respectively, from the year-ago levels.