Hanesbrands Inc. (HBI) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance with a 2% sales increase, 22% operating profit growth, and 60% EPS rise. The company has mitigated cost headwinds and improved operating margins significantly. The Q&A section indicates confidence in managing tariff impacts and strategic pricing. While some management responses were vague, the overall sentiment is positive, supported by guidance raise and strong operational metrics. Given the market cap of $1.7 billion, the stock is likely to react positively, within the 2% to 8% range over the next two weeks.
Key Financial Performance
Sales Sales increased 2% year-over-year to $991 million. Adjusting for foreign exchange rates and transition service revenue, sales on an organic constant currency basis were relatively consistent with the prior year. The increase was driven by growth in certain regions and product categories, despite ongoing consumer headwinds in the U.S. innerwear market.
Operating Profit Operating profit increased 22% year-over-year. This growth was primarily driven by cost restructuring actions and productivity improvement initiatives, which led to a 255 basis point expansion in operating margin to 15.5%.
Earnings Per Share (EPS) EPS increased 60% year-over-year to $0.24. This was driven by higher margins and lower interest expenses due to significant debt reduction efforts over the past year.
Gross Margin Gross margin increased 145 basis points year-over-year to 41.2%. This improvement was attributed to cost savings and productivity initiatives, such as assortment management.
SG&A Expenses SG&A expenses decreased 2% year-over-year, or 110 basis points as a percentage of sales. This reduction was due to cost reduction actions that offset growth-related investments.
Operating Cash Flow Operating cash flow was $36 million for the quarter, driven by strong profit performance and disciplined working capital management.
Leverage Leverage at the end of the second quarter was 3.3x on a net debt to adjusted EBITDA basis, which is 1.3x lower than the prior year. This improvement was due to significant debt reduction efforts.
Operating Highlights
Hanes Moves products: Expansion of product line.
Exclusive product offering with Urban Outfitters: Elevating the Hanes brand in the U.S.
Hanes premium T-shirts: Specialty retailer offerings in Japan.
Absorbency products: New categories launched in Australia and the U.S.
Scrubs and loungewear: 165% growth in new businesses.
Americas: Sales increased over prior year.
Australia: Sales were flat.
U.S.: Sales decreased slightly by $5 million.
Supply chain: Streamlined and diversified globally for efficiency and growth capacity.
Advanced analytics and AI: Used for inventory, assortment management, demand planning, and forecasting.
Cost restructuring actions: Drove profit growth and margin expansion.
SG&A expenses: Decreased 2% compared to prior year.
Debt reduction: Paid down $1.5 billion of debt over 2 years, reducing leverage by nearly 2.5 turns.
Margin expansion: Operating margin expanded 255 basis points to 15.5%.
EPS growth: Increased 60% for the quarter.
Risk or Challenges
Macroeconomic Conditions: The company acknowledges risks related to current macroeconomic conditions, which could impact consumer demand and overall business performance.
Consumer Demand Dynamics: Ongoing consumer headwinds, particularly in the U.S. innerwear market and intimate apparel category, continue to pressure sales.
Strategic Execution Risks: The ability to successfully execute strategic initiatives, including restructuring and other action-related items, poses a risk to achieving desired outcomes.
Inflationary Environment: The inflationary environment presents challenges that could affect costs and profitability.
Debt Reduction Timeline: The company faces risks in meeting its anticipated timeline for deleveraging, which could impact financial flexibility.
Tariff Environment: Uncertainty around tariffs could pose cost headwinds, although the company believes it can mitigate these in the short and long term.
Guidance & Outlook
Full Year Sales and Profit Outlook: The company raised its full year sales and profit outlook, expecting full year sales to increase to approximately $3.53 billion, operating profit to increase 17% to approximately $485 million, and EPS to increase 65% to approximately $0.66.
Third Quarter Guidance: For the third quarter, the company expects sales of approximately $900 million, operating profit of approximately $122 million, and EPS of approximately $0.16.
Margin Expansion and Operating Profit Growth: The company anticipates continued margin expansion and operating profit growth in the third quarter, with even faster EPS growth.
Consumer Environment Assumptions: The company maintains a conservative view of the muted consumer environment and believes it is well positioned to manage through the current tariff environment, with confidence in fully mitigating cost headwinds in both the short and long term.
Leverage and Debt Reduction: Leverage at the end of the second quarter was 3.3x on a net debt to adjusted EBITDA basis, approaching the target range of 2 to 3x. The company has reduced leverage by 1.3x compared to the prior year.
Shareholder Return Plan
The selected topic was not discussed during the call.
Key Q&A
Earnings Word Cloud
HBI Transcript
The earnings call reveals strong financial performance with a 2% sales increase, 22% operating profit growth, and 60% EPS rise. The company has mitigated cost headwinds and improved operating margins significantly. The Q&A section indicates confidence in managing tariff impacts and strategic pricing. While some management responses were vague, the overall sentiment is positive, supported by guidance raise and strong operational metrics. Given the market cap of $1.7 billion, the stock is likely to react positively, within the 2% to 8% range over the next two weeks.
The earnings call presents a mixed outlook. While there is positive news regarding debt reduction, EPS growth, and margin expansion, concerns about consumer demand in the U.S. innerwear market and potential tariff impacts linger. The Q&A session reveals management's confidence in mitigating tariffs, but lacks concrete details. Given the company's small market cap, these mixed signals suggest a neutral stock price movement in the short term.
The earnings call highlights strong financial performance with significant EPS and operating profit growth, improved margins, and debt reduction. Despite liquidity concerns from inventory build, management's confidence in mitigating tariff impacts and strategic plans for margin expansion and shareholder returns are positive indicators. Q&A insights reveal effective risk management and potential growth in international markets. The market cap suggests moderate sensitivity to these factors, resulting in a positive stock price prediction.
The earnings call reveals strong financial metrics with significant EPS growth and improved margins, despite a slight decrease in net sales. The company is effectively managing debt, enhancing cash flow, and has raised guidance, indicating confidence in future performance. Despite some vague responses in the Q&A, the overall sentiment is positive with plans for increased shareholder returns and strategic cost management initiatives. Given the company's small-cap status, these factors are likely to result in a positive stock price movement (2% to 8%) over the next two weeks.
HBI Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
