How Hanesbrands is Transforming Its Business for Long-Term Stability

Hanesbrands Inc. HBI is driving long-term growth through cost-saving initiatives, supply-chain optimization and debt reduction. The company is strengthening retail partnerships, expanding in key international markets and leveraging AI-driven analytics for better demand forecast and inventory management. These moves have supported the HBI stock’s performance, with shares rising 1.3% in the past month, outperforming the industry and the S&P 500’s declines of 11.9% and 2.8%, respectively.

HBI Stock Past Month Performance

Currently trading at $5.95, HBI is 34.6% below its 52-week high of $9.1 touched on Nov. 26, 2024, presenting a compelling opportunity for value-focused investors. With strategic initiatives in place, the company is well-positioned to navigate challenges and drive long-term stability.

Let us analyze the fundamentals of Hanesbrands, a global leader in iconic apparel brands, to understand the key drivers behind its market position and financial resilience.

Hanesbrands’ Strategic Transformation & Growth

Hanesbrands' cost-saving initiatives focus on operational efficiency and financial stability. The sale of the Global Champion business in June 2024 aligns with its strategy to streamline operations, reduce fixed costs and optimize the supply chain. By the end of the fourth quarter of 2024, the company generated $264 million in operating cash flow and paid down more than $1 billion in debt, significantly reducing leverage.

To maximize the benefits of its divestiture, Hanesbrands is implementing three key strategies. Firstly, HBI is modernizing the technology platform to improve analytics, forecasting and automation. Secondly, the company is optimizing its supply chain to improve efficiency and responsiveness. Lastly, it aims to cut non-revenue-generating SG&A expenses to streamline costs. These efforts will create a more efficient, focused and cost-effective operation.

Hanesbrands has deepened relationships with key retail partners, ensuring increased shelf space and distribution gains across multiple channels. This strategic positioning has bolstered brand visibility and consumer accessibility, particularly in mass retail and e-commerce. The company is also leveraging its global go-to-market strategy to capture demand in growing international markets, especially in Mexico and Australia, where sales momentum is improving.

Beyond traditional product categories, Hanesbrands is enhancing its innovation pipeline with advanced AI-driven analytics, allowing for better demand forecasting, inventory optimization and personalized marketing strategies. This shift toward a data-driven operational model is expected to improve efficiency, boost customer engagement and drive incremental revenue growth.

Challenges That Could Slow Hanesbrands’ Momentum

Hanesbrands has been grappling with a challenging macroeconomic consumer landscape. Inflation, market uncertainties and a tough consumer demand landscape have been impediments for HBI. The company expects these difficulties to persist in 2025, with net sales projected between $3.47 billion and $3.52 billion, remaining flat year over year on a reported basis. This outlook includes a $60 million impact from currency fluctuations, while the U.S. market is also expected to show minimal growth, limiting near-term upside.

Hanesbrands’ international presence exposes it to risks like currency fluctuations, economic instability and trade regulations. In the fourth quarter of 2024, foreign exchange fluctuations created a 110-basis-point headwind to sales, highlighting the impact of these challenges on the company’s performance.

Analysis of the Hanesbrands Stock

Hanesbrands is strengthening its financial position through cost-saving initiatives, debt reduction and operational efficiency. While macroeconomic challenges and currency fluctuations pose risks, its strategic execution and global market presence support long-term growth. With a focus on profitability and operational improvements, HBI remains well-positioned for sustained performance. HBI currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

V.F. Corporation VFC engages in the design, procurement, marketing and distribution of branded lifestyle apparel, footwear and accessories for men, women and children in the Americas, Europe and the Asia-Pacific. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for V.F. Corp’s current-quarter EPS indicates growth of 53.1% from the year-ago levels. VFC delivered an earnings surprise of 82.4% in the last reported quarter. 

Ralph Lauren Corporation RL designs, markets and distributes lifestyle products in North America, Europe, Asia and internationally. It currently flaunts a Zacks Rank #1. RL delivered a trailing four-quarter average earnings surprise of 6.5%.

The Zacks Consensus Estimate for Ralph Lauren’s current fiscal-year sales and earnings indicates growth of 5.8% and 16.5%, respectively, from the year-ago actuals. 

Gildan Activewear Inc. GIL manufactures and sells various apparel products. It carries a Zacks Rank of 2 at present. GIL delivered a trailing four-quarter earnings surprise of 5.3%, on average.

The consensus estimate for Gildan Activewear’s current fiscal-year sales and earnings indicates growth of 4.4% and 16%, respectively, from the year-ago actuals.

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This article originally published on Zacks Investment Research (zacks.com).

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