Hanesbrands Stock Surges after Beating Q4 Expectations



Better-than-expected results

Hanesbrands’ (HBI) better-than-expected Q4 2018 results caused a steep hike in the stock today. It was up 19.1% as of 1:52 PM ET.

Sales grew 7.5% to $1.77 billion, surpassing analysts’ estimate of $1.71 billion. Excluding the impact of currency fluctuations, the company’s organic sales growth was 6% in the fourth quarter. Hanesbrands’ organic sales were driven by the expansion of the company’s Champion brand, international diversification, and growth of the consumer-direct channel.

Sales from Hanesbrands’ consumer-direct channel, which includes company-owned retail stores and online sales, grew 23% in the fourth quarter and accounted for one-fourth of its overall sales.

Hanesbrands’ fourth-quarter adjusted EPS of $0.48 exceeded analysts’ estimate of $0.46 but declined 7.7% on a year-over-year basis. The company’s fourth-quarter bottom line declined due to a higher tax rate, reflecting the impact of US tax reforms.

Article continues below advertisement

Full-year performance

Hanesbrands’ sales rose 5.1% to $6.8 billion in 2018, driven by a 14.1% rise in the company’s international sales and 8.3% growth in activewear sales. However, the company’s innerwear sales declined 3.4% in 2018. Hanesbrands is undertaking several initiatives to improve its innerwear intimates business, which store closures and bankruptcies in the mid-tier retail and department store channel have been hurting.

Hanesbrands’ adjusted EPS were $1.71 in 2018, compared to $1.93 in 2017.

Guidance for 2019

Hanesbrands expects its 2019 sales in the range of $6.885 billion–$6.985 billion, reflecting low-single-digit growth compared to 2018. The company’s 2019 sales growth is expected to be driven by continued strength in the activewear and international businesses, partially offset by pressure in the innerwear business. Hanesbrands expects its Bras N Things acquisition to contribute $17 million to its top line in 2019.

The company expects its 2019 adjusted EPS in the range of $1.72–$1.80.


More From Market Realist