2023-08-10 09:36:56 ET
HanesBrands ( NYSE: HBI ) fell 7.6% on Thursday morning as forecasts disappointed.
For the second quarter, non-GAAP EPS of -$0.01 beat the average analyst estimate by $0.01. Revenue of $1.44B missed by $20M. The company expects adjusted EPS for the third quarter between $0.07 and $0.13, versus the expectation of $0.21, and full-year EPS in the range of $0.16 and $0.30, compared to the $0.31 estimate.
“We’re confident in our ability to exit the year with gross margin in the high 30% range, generate $500 million of operating cash flow, and pay down more than $400 million of debt, despite the difficult apparel market, particularly in Australia and the U.S. activewear category, which caused us to adjust our second-half outlook,” Chief Executive Officer Steve Bratspies said in a statement.
HBI’s results come as activist investor Barington Capital Group calls for change at the company to reduce costs and debt, and says new leadership may be required.
The activist investor questioned the ability of the board and management to effectively lead the business in a letter sent last week to the chair of the board Ronald Nelson. Barington called for “immediate and decisive actions to create long-term value for shareholders.”
In response to Barington’s letter, HBI said the board of directors and management “are committed to moving the company forward with a clear priority to deliver sustainable value creation for shareholders. We regularly engage with shareholders to understand their perspectives and to share ours.”
“Consistent with this practice, members of HanesBrands’ management team have held discussions with Barington over the past year, and the chairman of our board engaged with Barington in recent weeks, prior to Barington publicly issuing its letter.”
In the quarterly earnings statement, Bratspies said HBI is progressing in several areas, though not all areas are “delivering results in the timeline we anticipated.”
“We’re taking a number of actions, including additional cost saving initiatives, to improve performance as well as actively looking across the business at additional options to enhance shareholder value,” Bratspies said.
HBI is down 56% in the past 12 months.
More on HanesBrands:
- Hanesbrands Non-GAAP EPS of -$0.01 beats by $0.01, revenue of $1.44B misses by $20M
- HanesBrands pushes back after Barington calls for change after a year of weak performance
- Hanesbrands gains amid trader chatter about the potential for an activist play
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HanesBrands drops as forecasts disappoint amid activist investor calls for change