Hanesbrands Q2 2025 Earnings Report

Hanesbrands EPS Results

• Actual EPS: $0.24
• Consensus EPS: $0.18
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: $0.15

Hanesbrands Revenue Results

• Actual Revenue: $991.33 million
• Expected Revenue: $971.93 million
• Beat/Miss: Beat by +$19.39 million
• YoY Revenue Growth: -0.40%

Hanesbrands Announcement Details

• Quarter: Q2 2025
• Date: 8/7/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 8:30AM ET

Hanesbrands (NYSE:HBI) is a leading global apparel company specializing in everyday basics and activewear. The company’s product portfolio encompasses underwear, bras, socks, hosiery, T-shirts, and performance apparel under well-known brands such as Hanes, Champion, Playtex, DIM, Maidenform, and Bonds. Through a combination of trusted brand equity and a focus on comfort, fit, and quality, Hanesbrands serves a broad consumer base across multiple demographic segments.

Established in 2006 following its spin-off from the Sara Lee Corporation, Hanesbrands has grown through strategic acquisitions and organic expansion. The company is headquartered in Winston-Salem, North Carolina, and maintains a strong management team led by Chairman and Chief Executive Officer Stephen B. Bratspies. Under his leadership, Hanesbrands has placed emphasis on operational efficiency, supply-chain optimization, and the development of direct-to-consumer channels.

Hanesbrands operates in more than 50 countries across North America, Europe, Latin America, and the Asia-Pacific region. Its products are distributed through a diverse network that includes mass-market retailers, department stores, specialty chains, e-commerce platforms, and wholesale partners. This multi-channel approach enables the company to reach both value-oriented and premium consumers while adapting to shifting retail landscapes.

In recent years, Hanesbrands has also prioritized sustainability and innovation, setting goals to reduce its environmental footprint through responsible sourcing, energy-efficient manufacturing, and waste reduction initiatives. The company continues to invest in fabric and design technologies aimed at enhancing product performance and consumer appeal, positioning Hanesbrands to respond to evolving market trends in apparel and activewear.

Hanesbrands Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: The company delivered Q2 results with 2% sales growth, 22% operating profit growth, and a 60% increase in EPS over the prior year.
• Positive Sentiment: Full-year guidance was raised to approximately $3.53 billion in sales, 17% higher operating profit (~$485 million), and 65% higher EPS (~$0.66).
• Positive Sentiment: Gross margin expanded by 145 basis points to 41.2%, while SG&A leverage improved by 110 basis points thanks to productivity and cost-reduction initiatives.
• Negative Sentiment: The U.S. intimate apparel segment saw year-over-year declines due to ongoing consumer headwinds, although basics, activewear, and new businesses showed growth.
• Neutral Sentiment: Tariff costs are expected to impact earnings in Q4, but the company plans to fully mitigate these through strategic pricing, U.S. content advantages, and supply-chain actions.

Presentation

[Operator]

Good day and thank you for standing by. Welcome to the Hanesbrands Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you'll need to press 11 on your telephone.

[Operator]

You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to T. C. Robillard, Vice President of Investor Relations. Please go ahead.

[T.C. Robillard, Chief Investor Relations Officer at HanesBrands]

Good day, everyone, and welcome to the Hanesbrands Quarterly Investor Conference Call and Webcast. We are pleased to be here today to provide an update on our progress after the 2025. Hopefully, everyone has had a chance to review the news release we issued earlier today. The news release, updated FAQ document and the replay of this call can be found in the Investors section of our hanes.com website. On the call today, we may make forward looking statements, either in our prepared remarks or in the associated question and answer session.

[T.C. Robillard, Chief Investor Relations Officer at HanesBrands]

These statements are based on current expectations or beliefs and are subject to certain risks and uncertainties that may cause actual results to differ materially. These risks include those related to current macroeconomic conditions, consumer demand dynamics, our ability to successfully execute our strategic initiatives, including our restructuring and other action related items, our ability to deleverage on the anticipated time frame and the inflationary environment. These risks also include those detailed in our various filings with the SEC, which may be found on our website. These forward looking statements should be considered in conjunction with cautionary statements in our news release and in our filings with the SEC. The company does not undertake to update or revise any forward looking statements, which speak only to the time at which they are made.

[T.C. Robillard, Chief Investor Relations Officer at HanesBrands]

Unless otherwise noted, today's references to our consolidated financial results and guidance exclude all restructuring and other action related charges and speak to continuing operations. Additional information on the quarter's results and our guidance, including a reconciliation of these and other non GAAP performance measures to GAAP, can be found in today's news release. With me on the call today are Steve Bradsby, our chief executive officer and Scott Lewis, our chief financial officer. For today's call, Steve and Scott will provide some brief remarks, and then we'll open it up to your questions. I will now turn the call over to Steve.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

Thank you, TC. Good morning, everyone, and welcome to our second quarter earnings call. For the third consecutive quarter, Hanesbrands delivered better than expected sales, gross margin, operating profit and earnings per share. Our strong performance underscores the continued success of our growth strategy and is why we're raising our full year guidance. I wanna thank the global HBI team for all their hard work and efforts.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

As we've highlighted over the past several quarters, Hanesbrands is a new company. We're healthier, more focused, and more profitable. Our brands are stronger. We're driving innovation, including the expansion of our Hanes moves products. We're elevating the Hanes brand, including our exclusive product offering with Urban Outfitters in The US and our Hanes premium t shirts offerings at specialty retailers in Japan.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

We're creating new categories behind our absorbency products in Australia and The US. We're extending our brands into adjacent categories, including loungewear and scrubs, and we're consistently investing in our brands at levels that are more than double what we spent four years ago. We're generating structurally higher profit margins through increased productivity and lower fixed costs, even while simultaneously investing for growth. We streamlined our supply chain while remaining diversified and balanced across the globe, which makes us more efficient and provides us with capacity for growth. And we're leveraging advanced analytics with the use of AI to drive operational improvement around the globe, including inventory and assortment management, as well as demand planning and forecasting.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

We've also strengthened our balance sheet, paying down $1,500,000,000 of debt and reducing leverage by nearly two and a half turns over the past two years. Our transformation work and the execution of our growth strategy are generating tangible results. We're operating on a stronger foundation. We're leveraging our competitive advantages, and we're delivering strong financial performance. For the second quarter, we once again saw growth rates that accelerated down the p and l as sales increased 2%, operating profit increased 22%, and EPS increased 60% over prior year.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

On a constant currency basis, sales increased over prior year in The Americas, were flat in Australia, and decreased slightly or about $5,000,000 in The US, with our performance in each region in line with our expectations. As we've experienced over the past several quarters, ongoing consumer headwinds continue to pressure The US Interwear market, especially with the intimate apparel category. While our intimates business was down compared to last year, we delivered strong growth in our other businesses, including low single digit growth in basics, nearly 30% growth in active, a 165% growth in new businesses, which includes our scrubs and loungewear products. We delivered another quarter of strong profit growth driven primarily by our cost restructuring actions and productivity improvement initiatives. For the quarter, operating margin expanded two fifty five basis points over the last year to 15.5%, with the improvement roughly split between gross margin expansion and SG and A leverage.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

SG and A levered 110 basis points in the quarter, marking a second consecutive quarter of leverage as our cost reduction actions have scaled to the point where they are more than offsetting our investments. And with lower interest expense from our debt reduction actions, profit growth further accelerated, resulting in a 60% increase in EPS for the quarter. So in closing, our strategy is working. It's delivering consistent, strong results, and we're confident it positions us for continued success long term. We have a strong global asset base, meaningful competitive advantages, and the speed and flexibility to manage through the current market environment.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

And we have multiple avenues to drive increased shareholder returns over the next several years to consistent sales growth, additional margin expansion, and continued debt reduction. And with that, I'll turn the call over to Scott.

[M. Scott Lewis, CFO at HanesBrands]

Thanks, Steve. We delivered another strong quarter, including better than expected sales, gross margin, operating profit, and earnings per share. This strong performance over the first half of the year is a direct result of our growth strategy and transformation work and gives us the confidence to raise our full year guidance. For today's call, I'll touch on the highlights from the quarter, then I'll provide some thoughts on our outlook. For additional details, I'll point you to our news release and FAQ document.

[M. Scott Lewis, CFO at HanesBrands]

Turning to the details of the quarter. Sales on a reported basis increased 2% over prior year to $991,000,000 Adjusting for the impact from foreign exchange rates, transition service revenue, sales on an organic constant currency basis were relatively consistent with prior year. We saw continued year over year expansion in both our gross and operating margins as our cost savings and productivity initiatives, such as assortment management, are driving structurally higher and sustainable margins while funding growth related investments. For the quarter, gross margin increased 145 basis points over prior year to 41.2%. SG and A expenses decreased 2% compared to prior year or 110 basis points as a percent of sales.

[M. Scott Lewis, CFO at HanesBrands]

The combination of these drove a two fifty five basis point expansion of our operating margin to 15.5% for the quarter. And with respect to earnings per share, EPS increased 60% over last year to $0.24 driven by higher margins as well as lower interest expense as we benefited from meaningful debt reduction efforts over the past year. With respect to cash flow and the balance sheet, we reported $36,000,000 of operating cash flow in the quarter, driven by strong profit performance and disciplined working capital management. Leverage at the end of the second quarter was 3.3 times on a net debt to adjusted EBITDA basis, which is 1.3 times lower than prior year and is approaching our target range of two to three times. Now turning to guidance.

[M. Scott Lewis, CFO at HanesBrands]

Our outlook for the third quarter includes continued margin expansion and operating profit growth and even faster EPS growth. For the third quarter, we expect sales of approximately $900,000,000 operating profit of approximately $122,000,000 and EPS of approximately $0.16 We also raised our full year sales and profit outlook to reflect our strong performance year to date. We now expect full year sales to increase over prior year to approximately $3,530,000,000 We expect operating profit to increase 17% to approximately $485,000,000 and we expect EPS to increase 65% to approximately $0.66 Putting some context on the assumptions within our full year outlook, as we have all year, we continue to take a conservative view in the muted consumer environment. With our advantaged supply chain, we continue to have good visibility to input costs and cost savings through the remainder of the year, and our outlook reflects what we know about tariffs today. We continue to believe we are well positioned to manage through the current tariff environment and remain confident that we can fully mitigate the cost headwinds both in the short and long term.

[M. Scott Lewis, CFO at HanesBrands]

So in closing, our transformation work and the execution of our growth strategy are delivering consistent results. We're operating on a stronger foundation with meaningful competitive advantages. We're leaner, healthier, more profitable, and well positioned to succeed at any operating environment. And we believe we can deliver strong shareholder returns over the next several years through consistent revenue growth, margin expansion and strong cash generation. And with that, I'll turn the call over to TC.

[T.C. Robillard, Chief Investor Relations Officer at HanesBrands]

Thanks, Scott. That concludes our prepared remarks. We'll now begin taking your questions, and we'll continue as time allows. I'll turn the call back over to the operator to begin the question and answer session. Operator?

[Operator]

Our first question comes from the line of Jay Sole with UBS.

[Jay Sole, Managing Director at UBS Group]

Great. Thank you so much. Steve, I'd like to just ask if you could elaborate a little bit about what drove the outperformance in the quarter and also what gave you the confidence to increase the outlook and sort of what's driving that increased outlook. That's where I'd to start first. Thank you.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

Sure, Jay. Good morning. Well, Scott, I'll let you talk about kind of the quarter and I'll talk a little bit about

[M. Scott Lewis, CFO at HanesBrands]

the outlook and the guide. Sounds good. Good morning, Jay. Thanks for your question. So we were very pleased with our Q2 performance, and we're continuing to build on the momentum that we started last year.

[M. Scott Lewis, CFO at HanesBrands]

For Q2 specifically, we really exceeded expectations across all of our key metrics. On the sales side, we saw upside there, as we just continue to focus driving the benefits from our growth strategy. On the profit side, op margin, I had a really good performance there. We're now consistently generating structurally higher margins. We're seeing that every quarter now.

[M. Scott Lewis, CFO at HanesBrands]

Q2 op margin came in at 15.5%, which was two eighty basis points above last year and 150 basis points above our guide. And to give you some color around that, within gross margin, the benefits from our cost savings and productivity initiatives continue to build. And we're seeing strong performance in our facilities. The productivity there has been really good, and that's favorably above and beyond our expectations. Our savings initiatives are coming through and just general plant performance has been really, really strong.

[M. Scott Lewis, CFO at HanesBrands]

On SG and A, similar story there. We're seeing really good benefits from our cost reduction actions. We're now scaling our SG and A leverage now from quarter to quarter results. In the first quarter, we were we levered SG and A around two twenty basis points. In the second quarter, it was down 110 basis points.

[M. Scott Lewis, CFO at HanesBrands]

So we're consistently driving again those benefits. We're seeing it from an incremental standpoint and at a faster clip. We're seeing those savings in our facilities, within our distribution centers. Also in our back office, like corporate and business support activities, we're seeing that we're operating much leaner than we actually initially anticipated. So we're running really well there.

[M. Scott Lewis, CFO at HanesBrands]

And then the last thing I'd point out, it's on interest and we've talked a lot about debt reduction there. We're seeing that benefit flowing through on the P and L side with lower interest and leverage coming down. So that's even magnifying the growth rate as from a P and L perspective. Steve, want talk about the guidance?

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

Yes. So obviously, Scott, it's a good recap. So obviously, we feel really good about where we are and we think we have really good visibility to the back half. You know, if you look at on the revenue side of the guide, you know, certainly the strong first half results, kinda booster, bolster where we're gonna go. The transformation work that we're we're simpler business and that really positions us well to operate in this environment.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

POS is improving in the business. And if you go back and you look, you know, June was better than May. July has been better than June. So, you know, still headwinds there, but we're starting to see momentum in the business and we feel good about that. So whether it's us continue to invest in our brands, you know, leveraging the new assortment capabilities we have, the new businesses which are really starting to gain traction, we feel good about top line and continue to perform as we've been performing.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

And then as Scott said, you know, about profit, you know, the first half, we did well and we continue to see that margin expansion coming as we have more cost savings opportunities and maybe most importantly visibility that we have to the cost that will be flowing into the P and L in the back half of the year. So you roll all that up and that's our confidence to take the guide up for the back half.

[Jay Sole, Managing Director at UBS Group]

Got it. Sounds great. Thank you so much.

[Operator]

Our next question comes from Peter McAldrick with Stifel.

[Alexander Douglas, Analyst at Stille]

This is Alex Douglas on for Peter. Apologies if I missed this in the prepared remarks, but could you maybe provide any insights into kind of the cadence of tariff impacts kind of through 2025 and 2026? And do you still not expect an impact for tariffs until, April? Thank you.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

Sure. Good morning, Alex. Yeah. When you think about tariffs and the impact on our business, first of all, we won't be really experiencing that cost until q four because of the inventory, that we have and the way cost flows off of our balance sheet. But we're very confident that we will mitigate the tariffs, at the rates that we're experiencing today.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

We have very clear plans to do that. And as you think about our business, not only do you have the q four impact, but you have to think about those other offsets about meaningful US content content that we have in our products that are exempt from reciprocal. The good East West balance that we have in our supply chain. And, you know, the team's being extremely proactive. A lot of cost actions, that we are taking to reduce costs.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

We're gonna have some surgical pricing actions that we'll be taking, and we just have a lot of, ability to not have that impact on business, fully in q four. So we, we feel good and it's all built into our guide and, we can offset the situation.

[Alexander Douglas, Analyst at Stille]

Thank you.

[Operator]

Our next question comes from Ike Boruchow with Wells Fargo.

[Juliana Duque, Equity Research Associate at Wells Fargo]

Hi, good morning. This is Juliana on for Ike. So, there's been some chatter in the mass channel on pushback on pricing. And I'm curious if you could speak towards your conversations today and how you're thinking about that mass channel through the second half. Thank you.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

Hi, Julia. I I think correct me if I'm wrong. I think you were asking about pricing in the mass channel and our ability and the pushback that we can get you broke up a little bit. Is that correct?

[Juliana Duque, Equity Research Associate at Wells Fargo]

Yes. That's correct.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

Okay. So, yeah, pricing is going be a part of our, you know, tariff offset program. As you can imagine, I'm not going to get into details for competitive reasons. It is one of the tools and levers that we have, but we feel really good and confident about our ability to take price, supported by our brand strength, you know, continued investment that we're making and very important is, the innovation that we're putting into the market. So, in the past when we've taken price, it has stuck and we certainly expect that to go through, as we go forward.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

We're going take a very strategic approach. We know very well how the market reacts, understand the competitive situation. We put this consumer at the center of pricing decisions that we make. So while we haven't taken price in a few years, we're very confident in our ability to do that. Obviously, have, very in-depth conversations with all of our key customers including the mass channel.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

And we think our, you know, share leadership position and as the innovation and and other things we're bringing to market puts us in a a really good position to take the appropriate price, what we need and where we need to take it.

[Juliana Duque, Equity Research Associate at Wells Fargo]

Great. Thank you.

[Operator]

Our next question comes from David Swartz with Morningstar.

[David Swartz, Senior Equity Analyst at Morningstar]

Yes. Thanks for taking my question. Can you explain maybe what you're doing to try to bring the profitability of the international business to be closer to The US operations? And do you think that over time, the difference will close? Thanks.

[M. Scott Lewis, CFO at HanesBrands]

Yes. Good morning, David. So the international business, very similar to The US business. We have when we talk about our cost savings initiative, it's broadly, right? It's not just one business or just one specific function.

[M. Scott Lewis, CFO at HanesBrands]

We're really focusing on taking out fixed costs across the board. And so the international business, we're seeing that improvement year over year very consistently with The U. S. Business. One thing to factor in when you're looking at the international business is that it's a heavier retail component.

[M. Scott Lewis, CFO at HanesBrands]

So you have some more fixed cost, SG and A type cost is flowing through there. The top line has been challenged there, but it's kind of around. We feel like we are not sitting still there. We see opportunities to grow the top line will help kind of leverage that SG and A even more so going forward.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

Yeah. And one thing I would add to that is, when you look at the international market, you have a little bit of quarter to quarter fluctuation because we have a lot more direct to consumer business as Scott mentioned, the retail business. There's a lot of fixed costs in there. So, when we get into q four and there's more volume flowing through there, you'll see, a better margin in the fourth quarter. So, it does fluctuate quarter to quarter and then with seasonality.

[David Swartz, Senior Equity Analyst at Morningstar]

Thanks. That's very helpful. Secondly, on this announcement with SNS and the printwear channel, can you explain why you decided to make SNS your exclusive distributor and what that means for your printwear business going forward?

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

Yeah. I I'm not gonna get to the specifics of the arrangement with SNS. What I would tell you is, you know, they're a great partner as are some of the other players that we have. Printwear is an expected business that we think can grow over time for us. As we think about the assets that we have, our brand, and some of the key products we have, we thought it was a a an arrangement that would be very beneficial to to both sides as we go forward.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

And that's a business that we're gonna continue to lean into as we go forward.

[Operator]

Our next question comes from William Reuter with Bank of America.

[William Reuter, Managing Director at Bank of America]

Good morning. I have two. The first, I was wondering if you could quantify what the benefit of lower cotton was on margins in the quarter or you talked a lot about cost savings and productivity. If you could unpack some of the specific drivers of that gross margin improvement.

[M. Scott Lewis, CFO at HanesBrands]

Hey, good morning. Thanks for your question. We don't disclose specific kind of details within cotton as far as the benefits from quarter to quarter. I would say that cotton is a relatively small percentage of our total cost of sales. And we're seeing the productivity in the vast majority of that flowing through broadly across all of our raw materials.

[M. Scott Lewis, CFO at HanesBrands]

We're seeing that within our productivity and facilities. And so we've seen the tailwind from input costs in the first half. We expect that tailwind to continue into the back half. And so that's layering on top of the all the savings and other issues that we have. So we've really seen that gross margin really expand from quarter to quarter, and then full year will be up 55 basis points is what we're seeing at this point.

[William Reuter, Managing Director at Bank of America]

Got it. And then you discussed a little bit of softness in innerwear. You mentioned the category is a little bit soft. I guess how do you think you performed relative to the category? And given that private label continues to be a disruptive force kind of across every product in the world.

[William Reuter, Managing Director at Bank of America]

Are you seeing any increased competition from third party private label manufacturers? That's it.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

Yeah. So just because the softness we referenced was in the intimates part of our portfolio not in broader innerwear business. Broader innerwear business is actually is doing quite well. Our basics business is actually up low single digits, active business up nearly 30%. So it's really contained in the intimates business.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

And really inside intimates, that's really driven by the Made Inform brand and some of the challenges that we have there. So we are taking real action there as the exposure to shapewear is pretty significant inside of intimates. I feel good about Bali and Playtex and where they're headed particularly in our growth in, in the mass channel and and Amazon. But, we have some work to do in the main form business. The the M innovation that we brought to market last year did did good in its attention, which was to gain share with younger consumers.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

And improve the brand perception. But it was a little bit too narrow to drive the overall brand. So we're pivoting this year to much broader focus into t shirt bras and a broader focus in the mass and the online channel. So, work to do in intimates, no doubt about that as we go forward. On private label, you know, it's a mixed bag.

[Stephen Bratspies, Member of Board of Directors & CEO at HanesBrands]

If you look at our most important category to us, men's underwear, private labels down and it's not gaining share. It's actually losing share. It is it is up slightly in women's on the innerwear side. So, you know, our strategy always has been to manage private label is to run our business and run it really well as a branded business. So I'm a firm believer if we continue to invest in our brands, we continue to drive innovation, we continue to be market leader partner with our retail partners on insights, and have the best service that we will, we will win versus private label as we go forward.

[Operator]

That concludes today's question and answer session. I'd like to turn the call back to TC Robillard for closing remarks.

[T.C. Robillard, Chief Investor Relations Officer at HanesBrands]

We'd like to thank everyone for attending our call today, and we look forward to speaking with you soon. Have a great day.

[Operator]

This concludes today's conference. Thank you for participating. You may now disconnect.

Participants

Executives

• Stephen Bratspies, Member of Board of Directors & CEO

Analysts

• T.C. Robillard, Chief Investor Relations Officer at HanesBrands
• M. Scott Lewis, CFO at HanesBrands
• Jay Sole, Managing Director at UBS Group
• Alexander Douglas, Analyst at Stille
• Juliana Duque, Equity Research Associate at Wells Fargo
• David Swartz, Senior Equity Analyst at Morningstar
• William Reuter, Managing Director at Bank of America