Here's Why HanesBrands (HBI) Appears Promising Despite Hurdles

Core Insights - HanesBrands is focusing on strengthening its Innerwear business despite challenges from limited consumer spending in Q1 2024, emphasizing innovation and increased brand marketing investments for market share growth [2][3][15] - The company anticipates year-over-year increases in operating profit and earnings per share for Q2 and full-year 2024, even with expectations of soft sales [3][16] - HanesBrands has successfully reduced fixed costs by over $200 million, contributing to a decline in adjusted SG&A expenses by 3% to $378 million in Q1, which supports brand marketing investments [17] Financial Performance - HanesBrands achieved an adjusted gross margin of 39.9% in Q1 2024, returning to historical levels due to fixed-cost reductions and streamlined supply chains [9] - The Zacks Consensus Estimate for HanesBrands' 2024 earnings per share has increased by a penny to 46 cents over the past 30 days, indicating positive market sentiment [16] Strategic Initiatives - The company has sold the global Champion brand to Authentic Brands Group, allowing it to focus on enhancing its Innerwear category and driving above-market growth through consumer-centric product innovation [6][12] - HanesBrands is leveraging data analytics to improve retail partner sales and working capital efficiency, while also managing inventory more effectively by reducing SKUs [18] Market Position - HanesBrands' shares have increased by 10.2% over the past six months, contrasting with a 19.3% decline in the industry [13] - The company has been recognized for its strong resilience in a challenging macroeconomic environment, characterized by healthy margins and steady cash generation [10][15]