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Jun 27, 2020
Hanesbrands Q2 2020 Earnings Report
Reported double-digit growth in diluted earnings per share despite market disruption from the COVID-19 pandemic.
Key Takeaways
Hanesbrands reported second-quarter results with double-digit growth in diluted earnings per share despite market disruption from the COVID-19 pandemic. The earnings growth resulted from the company’s ability to pivot to production and sales of personal protective garments combined with relatively strong apparel performance in pandemic conditions, including 68% sales growth in the online channel.
2Q GAAP EPS increased 12% to $0.46; Adjusted EPS increased 58% to $0.60
2Q net sales of $1.74 billion driven by better-than-base-case-scenario apparel sales, including increasing point-of-sale trends and market-share gains, and better-than-expected new personal protective garments business
2Q net cash from operations of $65 million; year-to-date operating cash flow $40 million better than a year ago
Quarter-end liquidity of approximately $1.8 billion provides continued balance sheet strength and operational flexibility
Hanesbrands
Hanesbrands
Hanesbrands Revenue by Geographic Location
Revenue by Geographic Location
International Revenue
CapyFin.com Forward Guidance
Due to the continued uncertainty and unpredictability of the COVID-19 pandemic, HanesBrands will not provide quarterly and full-year performance guidance until visibility of the pandemic’s effect on global economies improves.
Positive Outlook
- The decline in apparel sales in the second quarter was better than the company’s base-case scenario.
- Absent a slowdown of store reopenings or recurrence of store closures, the company anticipates sequential improvement of sales declines in the third and fourth quarters.
- U.S. Innerwear sales on the strength of basics could return to rebased year-ago levels by the end of the year.
- Excluding the potential for additional government contracts, the company estimates that it could sell more than $150 million of protective garments in the second half of 2020, primarily in the third quarter.
- The company expects to generate positive cash flow in the second half.
Challenges Ahead
- Due to the continued uncertainty and unpredictability of the COVID-19 pandemic, HanesBrands will not provide quarterly and full-year performance guidance until visibility of the pandemic’s effect on global economies improves.
- The fiscal year ending Jan. 2, 2021, includes a 53rd week in the fourth quarter.
- The company has exited the C9 Champion mass program and DKNY license for intimate apparel.
- The company expects foreign currency exchange rates to reduce net sales and operating profit in 2020.
- The company repurchased approximately 14.5 million shares in the first quarter and has suspended share repurchases for the remainder of the year.