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Hanesbrands Gains From Strategic Moves: Staying Invested Makes Sense
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Hanesbrands (HBI - Free Report) has witnessed notable resilience in a challenging macroeconomic environment, driven by its strategic initiatives. The company's recent sale of the Global Champion business and exit from the U.S. outlet store sector are key moves designed to improve financial stability, streamline operations and enhance profitability.
Hanesbrands’ focus on enhancing its operating and financial models has been instrumental in driving long-term resilience and profitability. Key improvements include strengthening brand-building efforts, leveraging data analytics for better decision-making, and refining inventory management and SKU discipline to improve efficiency.
Growth Strategies to Bolster HBI’s Performance
Hanesbrands is undergoing a significant transformation highlighted by the $900 million sale of its Global Champion business to reduce debt and enhance financial stability. Exiting the U.S. outlet store business further streamlines operations, positioning the company for consistent growth, higher margins and improved cash generation. These strategic moves strengthen Hanesbrands' competitive position and long-term growth potential.
In addition to the current strategies, Hanesbrands has several other options to capitalize on the divestiture. By accelerating its digital transformation through enhancing e-commerce platforms, integrating more personalized customer experiences and leveraging, data analytics positions the company for significant online sales growth.
The company is streamlining its supply chain by closing selected manufacturing and distribution facilities while retaining growth capacity. This will simplify operations, lower overhead and enhance stock management. Additionally, Hanesbrands is focusing on reducing non-revenue generating expenses to create a more efficient cost structure.
Hanesbrands’ global consumer-centric approach has been working well. This approach has been helping the company acquire market share gains, 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 company launched Bali Breathe, marking the brand’s most significant innovation in over a decade.
Hanesbrands' innerwear segment has shown strong performance, with a 40 basis point increase in market share in the second quarter of 2024. This growth was driven by increased marketing investments and product innovation from the Hanes Originals and Maidenform M lines. Additionally, gains from cost-saving initiatives and the favorable business mix contributed to a 525 basis point improvement in adjusted gross margin.
HBI's Roadblocks
Hanesbrands continues to face challenges stemming from a tough macroeconomic environment, including inflation, market uncertainties and weakened consumer demand. These factors have impacted the company's performance, as seen in the 4% decline in net sales from continuing operations in the second quarter of fiscal 2024.
Hanesbrands expects these macroeconomic headwinds to persist in the upcoming quarter. For the third quarter of 2024, the company projects net sales to range between $920 and $950 million, reflecting a nearly 3% year-over-year decline. For the full year, Hanesbrands expects revenues to fall between $3.59 and $3.63 billion, representing almost a 4% decline on a reported basis and around a 2% decline on an organic basis at constant currency.
How to Play HBI Stock?
Hanesbrands has made significant strides through its strategic transformations, consumer-focused approach and product innovations, which indicate promising growth prospects. However, ongoing macroeconomic challenges, along with expected declines in net sales, create uncertainties. Given these factors, a hold recommendation may be prudent for investors currently evaluating the stock. Hanesbrands holds a Zacks Rank #3 (Hold) at present.
Shares of HBI have gained 44.4%, outpacing the industry’s growth of 3.2% in the past three months.
Image Source: Zacks Investment Research
Three Better-Ranked Stocks to Consider
Some better-ranked stocks in the Consumer Discretionary space are Wolverine World Wide (WWW - Free Report) , GIII Apparel Group (GIII - Free Report) and Steven Madden, Ltd. (SHOO - Free Report) .
Wolverine World Wide designs, manufactures and distributes a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WWW’s current financial-year sales indicates a decline of 23% from the year-ago reported figure. The consensus mark for EPS suggests significant growth to 85 cents from the 5 cents reported in the prior year. WWW has a trailing four-quarter earnings surprise of 7.5%, on average.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It flaunts a Zacks Rank #1 at present.
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.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
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Hanesbrands Gains From Strategic Moves: Staying Invested Makes Sense
Hanesbrands (HBI - Free Report) has witnessed notable resilience in a challenging macroeconomic environment, driven by its strategic initiatives. The company's recent sale of the Global Champion business and exit from the U.S. outlet store sector are key moves designed to improve financial stability, streamline operations and enhance profitability.
Hanesbrands’ focus on enhancing its operating and financial models has been instrumental in driving long-term resilience and profitability. Key improvements include strengthening brand-building efforts, leveraging data analytics for better decision-making, and refining inventory management and SKU discipline to improve efficiency.
Growth Strategies to Bolster HBI’s Performance
Hanesbrands is undergoing a significant transformation highlighted by the $900 million sale of its Global Champion business to reduce debt and enhance financial stability. Exiting the U.S. outlet store business further streamlines operations, positioning the company for consistent growth, higher margins and improved cash generation. These strategic moves strengthen Hanesbrands' competitive position and long-term growth potential.
In addition to the current strategies, Hanesbrands has several other options to capitalize on the divestiture. By accelerating its digital transformation through enhancing e-commerce platforms, integrating more personalized customer experiences and leveraging, data analytics positions the company for significant online sales growth.
The company is streamlining its supply chain by closing selected manufacturing and distribution facilities while retaining growth capacity. This will simplify operations, lower overhead and enhance stock management. Additionally, Hanesbrands is focusing on reducing non-revenue generating expenses to create a more efficient cost structure.
Hanesbrands’ global consumer-centric approach has been working well. This approach has been helping the company acquire market share gains, 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 company launched Bali Breathe, marking the brand’s most significant innovation in over a decade.
Hanesbrands' innerwear segment has shown strong performance, with a 40 basis point increase in market share in the second quarter of 2024. This growth was driven by increased marketing investments and product innovation from the Hanes Originals and Maidenform M lines. Additionally, gains from cost-saving initiatives and the favorable business mix contributed to a 525 basis point improvement in adjusted gross margin.
HBI's Roadblocks
Hanesbrands continues to face challenges stemming from a tough macroeconomic environment, including inflation, market uncertainties and weakened consumer demand. These factors have impacted the company's performance, as seen in the 4% decline in net sales from continuing operations in the second quarter of fiscal 2024.
Hanesbrands expects these macroeconomic headwinds to persist in the upcoming quarter. For the third quarter of 2024, the company projects net sales to range between $920 and $950 million, reflecting a nearly 3% year-over-year decline. For the full year, Hanesbrands expects revenues to fall between $3.59 and $3.63 billion, representing almost a 4% decline on a reported basis and around a 2% decline on an organic basis at constant currency.
How to Play HBI Stock?
Hanesbrands has made significant strides through its strategic transformations, consumer-focused approach and product innovations, which indicate promising growth prospects. However, ongoing macroeconomic challenges, along with expected declines in net sales, create uncertainties. Given these factors, a hold recommendation may be prudent for investors currently evaluating the stock. Hanesbrands holds a Zacks Rank #3 (Hold) at present.
Shares of HBI have gained 44.4%, outpacing the industry’s growth of 3.2% in the past three months.
Image Source: Zacks Investment Research
Three Better-Ranked Stocks to Consider
Some better-ranked stocks in the Consumer Discretionary space are Wolverine World Wide (WWW - Free Report) , GIII Apparel Group (GIII - Free Report) and Steven Madden, Ltd. (SHOO - Free Report) .
Wolverine World Wide designs, manufactures and distributes a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WWW’s current financial-year sales indicates a decline of 23% from the year-ago reported figure. The consensus mark for EPS suggests significant growth to 85 cents from the 5 cents reported in the prior year. WWW has a trailing four-quarter earnings surprise of 7.5%, on average.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It flaunts a Zacks Rank #1 at present.
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.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.