Hanesbrands Undervalued with Enhanced 2025 Guidance and Transformation Initiatives

Hanesbrands Inc. reported better than expected EPS GAAP figures and enhanced its 2025 revenue guidance. The company also promised margin improvements and further net debt reductions. With transformative initiatives underway, Hanesbrands appears undervalued, making it a promising investment opportunity.

HanesBrands Inc. (NYSE: HBI) delivered a robust second-quarter 2025 performance, surpassing expectations across multiple financial metrics. The company's earnings per share (EPS) increased significantly, while net sales, gross margin, and operating profit all showed substantial improvements. HanesBrands also provided an enhanced outlook for the full year 2025, promising continued margin improvements and net debt reductions.

In the second quarter of 2025, HanesBrands reported net sales of $991 million, a 1.8% increase over the prior year [1]. Gross profit surged by 38% to $412 million, and gross margin rose by 1,100 basis points to 41.6%. Adjusted gross profit and adjusted gross margin also showed significant improvements, increasing by 6% and 145 basis points, respectively. Operating profit soared by 345% to $155 million, and operating margin jumped by 2,210 basis points to 15.6%. Adjusted operating profit and adjusted operating margin also showed substantial increases, rising by 22% and 255 basis points, respectively.

The company's EPS increased by 162% over the prior year to $0.24, with adjusted EPS also rising by 60% to $0.24. The balance sheet strengthened as leverage decreased to 3.3 times net debt-to-adjusted EBITDA, an improvement of 1.3 times compared to the prior year [1].

HanesBrands attributed its strong performance to cost savings and productivity initiatives, assortment management, lower input costs, and supply chain consolidation. The company expects these actions to drive continued benefits in 2025. SG&A expenses decreased both on an absolute basis and as a percent of net sales, further contributing to the improved financial results.

Looking ahead, HanesBrands has raised its full-year 2025 outlook for net sales, operating profit, and EPS. The company expects net sales from continuing operations of approximately $3.53 billion, GAAP operating profit from continuing operations of approximately $471 million, and GAAP EPS from continuing operations of approximately $0.59. Adjusted operating profit and adjusted EPS are expected to be approximately $485 million and $0.66, respectively. Free cash flow is projected to be approximately $300 million [1].

The company's strong performance and enhanced outlook make HanesBrands an attractive investment opportunity. With transformative initiatives underway, the company appears well-positioned for continued long-term success. However, investors should remain vigilant regarding potential headwinds from U.S. tariffs and foreign currency exchange rates.

References:
[1] https://ir.hanesbrands.com/news-releases/news-release-details/hanesbrands-inc-announces-better-expected-second-quarter-2025