Hanesbrands Q3 Earnings Miss Estimates, Sales Decline Y/Y

Core Insights - Hanesbrands Inc. reported third-quarter 2025 results, with both revenue and earnings falling short of the Zacks Consensus Estimate, although the bottom line showed year-over-year improvement [1][3]. Financial Performance - Adjusted earnings from continuing operations were 15 cents per share, missing the Zacks Consensus Estimate of 16 cents, but up from 12 cents per share in the prior year [3][9]. - Net sales from continuing operations decreased by 1% year over year to $891.7 million, missing the Zacks Consensus Estimate of $901 million; on a constant-currency basis, organic net sales fell by 4.9% [3][9]. - Adjusted gross profit was $364 million, down 3% year over year, with an adjusted gross margin of 40.8%, a decline of nearly 80 basis points [4]. Cost Management - Selling, general and administrative (SG&A) costs were $255.9 million, down 8.4% year over year, and as a percentage of net sales, SG&A costs decreased to 28.7% from 31% in the prior year [5]. - Adjusted operating profit was $116 million, up 3% year over year, with an adjusted operating margin of 13%, an increase of 45 basis points, driven by lower SG&A expenses [5]. Segment Performance - U.S. segment net sales decreased by 4.5% year over year to $647.5 million, impacted by unexpected shifts in ordering patterns; however, unit point-of-sale trends improved sequentially [6]. - The U.S. segment's operating margin was 22.2%, up almost 20 basis points, supported by reduced input costs and cost-saving initiatives [7]. - International segment net sales decreased by 8% to $204.4 million, with a $4 million headwind from unfavorable foreign exchange rates; constant-currency net sales increased in Japan but declined in the Americas and Australia [8]. Financial Position - The company ended the quarter with cash and cash equivalents of $217.6 million, long-term debt of $2.21 billion, and total stockholders' equity of $446.4 million [11]. - Net cash from operating activities was $27.6 million, with free cash flow of $22.3 million in the third quarter [11]. Strategic Outlook - Hanesbrands has entered into a definitive merger agreement to be acquired by Gildan and is no longer providing guidance; however, management indicated that performance remains consistent with previously communicated 2025 EPS outlook [12].