M. Scott Lewis
CFO at Hanesbrands
Thanks, Steve. I want to echo your confidence on what the future holds for Hanesbrands. With a simplified and strengthened business model, I believe we're well-positioned to generate strong shareholder returns over the next several years, through a combination of double-digit earnings growth, paying down debt, and in the longer term, returning capital to shareholders.
As a result of the strategic actions we have implemented, our Global Champion and our U.S. outlet store businesses have been reclassified to discontinued operations and we realigned our segment reporting. For a recap of historical financials, please see the supplemental financial packet as posted on our Investor Relations website. For today's call, I'll focus on continuing operations. For additional details on the quarter's results and our guidance, I'll point you to our news release, second-quarter earnings handout, and FAQ document.
Overall, we delivered strong second-quarter results. We saw sequential improvement in top-line trends. Operating profit increased 46% over prior year, as we returned to double-digit operating margins and interest expense decreased due to lower levels of debt, all of which drove a 650% increase in earnings per share.
For the quarter, net sales were $995 million. This represents a decrease of 4% versus prior year, with 150 basis points coming from FX headwinds and 130 basis points from last year's U.S. Hosiery divestiture. On an organic constant currency basis, net sales decreased 1% in the quarter. Looking at our segments in the U.S. were approximately 90% of the businesses is innerwear. Sales decreased 1% compared to last year, which exceeded our expectations. While we continue to face a challenging environment with consumer spending headwinds and high inventory management of select retailers, we're seeing that our strategy is working and we're continuing to win in the marketplace.
In the quarter, we gained another 40 basis points of market share in innerwear, as increased marketing investments and product innovation are driving point-of-sale trends that continue to outperform the market. With respect to innovation, we saw strong growth in our Hanes Originals and Maidenform M product lines. And we launched Bali Breathe, which is our biggest innovation behind the brand in over a decade.
In our international business, sales increased 2% over prior year on a constant currency basis. Our Australia business, which represents roughly two-thirds of the segment, decreased at a mid-single-digit rate as lingering high interest rates continue to weigh on consumer spending. But we're not standing still in Australia. Despite the macroeconomic headwinds and the consumer's focus on value, we are continuing to find solutions to drive brand relevance and consumer engagement.
For example, we launched our bonds everyday value product, which is an extension of one of our U.S. products. This addressed a gap in our assortment that aligns with the current buying behavior of the Australian consumer, while maintaining a strong margin profile. Touching briefly on our other touching briefly on our other segment.
This segment historically held our U.S. Hosiery business, as well as sales from a transition service agreement between our supply chain and our previously owned European innerwear business. All of the year-over-year sales decrease in the quarter was due to the divestiture of our Hosiery business and the completion of the supply chain service agreement.
Turning to margins. We saw significant year-over-year improvement in both our gross and operating margins in the quarter, while simultaneously increasing brand marketing investments by 125 basis points. For the quarter, gross margin increased 525 basis points to 39.8%. The operating margin increased 430 basis points to 12.7%.
The margin improvement was driven by lower input costs, as we have moved past the impact from peak inflation, as well as the benefits from our existing cost savings initiatives. This allowed us to increase brand marketing investments to support growth-related initiatives, which is contributing to our market share gains.
A good example that underscores the success of our financial strategy is the return on our marketing spend. I was pleased to see the investments we made behind our Hanesbrands that one of our largest customers drove nearly 400 basis points of share gains with younger consumers. With our visibility to input costs and our existing cost savings programs, we're confident that we can continue to expand our gross and operating margins in the second half of the year.
And with the incremental cost savings initiatives that Steve highlighted, we see a long runway for significant margin expansion in 2025 and beyond. With respect to EPS, our focus on paying down debt yielded more than $8 million of lower interest expense in the quarter, as compared to last year. The lower interest expense coupled with higher profit margins drove EPS of $0.15, up 650% to $0.02 last year.
And now turning to guidance. All of my comments will refer to adjusted results from continuing operations, and will be based on the midpoint of our guidance range. I would like to point out that with a reclassification of Global Champion and U.S. outlet store businesses to discontinued operations, our current guidance is not comparable to our prior guidance given on May 9. That said, in comparing our current full year outlook on an apples-to-apples basis, our sales outlook is unchanged.
However, we increased our operating profit and EPS outlook, as we continue to outperform on delivering cost savings. Looking at sales, we continue to expect sequential improvement in the year-over-year sales trends. On an organic, constant currency basis, we expect net sales to decrease 2% for the full year and 1% for the third quarter.
Turning to operating profit. As we've highlighted all year, we have strong visibility to input cost and cost savings on our balance sheet through the rest of the year and into early next year. For the full year, we expect operating profit to increase 36% and operating margin to expand 330 basis points to 11.2%. For the third quarter, we expect operating profit to increase 34% and operating margin to expand 330 basis points to 12%. But our input cost, visibility, and the new cost savings programs we just put in place, we are well positioned for continued expansion of both our gross and operating margins next year.
Looking at EPS. For the full year, we expect EPS to increase 670% to $0.34. For the third quarter, we expect EPS to increase 650% to $0.11. With our commitment to pay down debt and our outlook for continued margin improvement, we believe we are well positioned for strong double-digit EPS growth next year. And with respect to leverage, with the proceeds from the announced Champion sale and internal cash generation, we expect to pay down an incremental $1 billion of debt in the second half of this year.
We expect our year-end leverage ratio to decline approximately 1.5 turns year-over-year and to end 2025 at approximately three times on a net debt to adjusted EBITDA basis. So in closing, we delivered solid second quarter results with sequential improvement in our year-over-year sales trends, strong growth in profit and earnings per share, and lower debt. These results underscore our strategic direction and operational strength.
Looking forward, Hanesbrands is taking a new direction. Our simplified, strengthened business model we are confident in our ability to generate strong shareholder returns in the next several years through a combination of double-digit earnings growth and continued debt reduction.
With that I'll turn the call over to T.C.
