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Hanesbrands Inc. (HBI)·Q3 2026 Earnings Summary

Executive Summary

  • Net sales were $0.892B, down 1.0% YoY, with underlying organic constant-currency sales down 4.9% due to mix and a late-quarter order shift; adjusted EPS was $0.15 (up 25% YoY), while GAAP EPS was $0.76 due to a $0.64 discrete tax benefit .
  • Versus guidance (provided in Q2), Q3 net sales (~$900M guided) came in slightly lower at $891.7M, adjusted operating profit ($122M guided) came in at $116.1M, and adjusted EPS ($0.16 guided) came in at $0.15; GAAP EPS was far above guidance due to the discrete tax benefit .
  • Versus S&P Global consensus, adjusted EPS modestly missed and revenue came in light: EPS $0.15 vs $0.1609*, revenue $0.892B vs $0.905B*; the company will not host a call due to the pending acquisition by Gildan, and withdrew formal forward guidance, noting it believes it is on track to meet its prior full-year EPS outlook .
  • Cost productivity and lower input costs continued to support margins YoY, but unfavorable mix and transition services revenue created headwinds; U.S. segment margin expanded to 22.2% while International margin declined to 10.2% .
  • Balance sheet leverage improved to 3.3x net debt-to-adjusted EBITDA (from 4.3x), but operating cash flow of $28M and FCF of $22M were below prior year due to working capital and mix; inventory rose 10% YoY largely due to tariffs .

What Went Well and What Went Wrong

What Went Well

  • Cost actions and productivity drove operating profit growth (+14% YoY) and operating margin expansion to 12.1% GAAP and 13.0% adjusted; SG&A fell as a percent of sales due to savings and discipline .
  • U.S. segment margin rose to 22.2% (+20 bps YoY) on lower input costs and cost savings; POS trends improved sequentially each month and back-to-school was strong, with Hanes gaining market share .
  • “The continued execution of our cost savings initiatives drove operating profit growth and operating margin expansion, which along with lower interest expense, combined to generate a 25% increase in adjusted earnings per share in the quarter,” said CEO Steve Bratspies .

What Went Wrong

  • Unanticipated late-quarter ordering shift at a large U.S. retail partner impacted replenishment orders, pressuring the top line and creating mix headwinds; Gross margin fell 70 bps YoY to 40.8% .
  • International sales declined 8% reported (6% constant currency), with margin down 230 bps YoY on lower volumes and higher brand investment; Americas softness and Australia intimate apparel headwinds weighed on results .
  • Operating cash flow ($28M) and FCF ($22M) were below prior year ($92M and $88M) due to working capital dynamics; inventory rose 10% YoY ($991M) with tariffs as the key driver .

Financial Results

Consolidated Performance vs Prior Periods and Estimates

MetricQ3 2024 (oldest)Q1 2025Q2 2025Q3 2025 (newest)
Net Sales ($USD Millions)$900.4 $760.1 $991.3 $891.7
Gross Margin %41.5% 41.7% 41.6% 40.8%
Operating Margin % (GAAP)10.4% 10.5% 15.6% 12.1%
Operating Margin % (Adjusted)12.5% 10.7% 15.5% 13.0%
Diluted EPS – Continuing Ops (GAAP, $)$0.07 $0.04 $0.24 $0.76
Diluted EPS – Continuing Ops (Adjusted, $)$0.12 $0.07 $0.24 $0.15

Consensus vs Actual (Q3)

MetricEstimate (Q3 2025)Actual (Q3 2025)
Revenue ($USD)$905.3M*$891.7M
Primary EPS ($)$0.1609*$0.15

Values marked with * retrieved from S&P Global.

Segment Breakdown (Q3)

Segment Net Sales ($USD Millions)Q3 2024Q3 2025
U.S.$678.3 $647.5
International$222.4 $204.4
Other-$0.4 $39.8
Total$900.8 $851.9
Segment Operating Margin %Q3 2024Q3 2025
U.S.22.1% 22.2%
International12.5% 10.2%
Total Segment19.7% 19.3%
Adjusted Total Operating Margin12.5% 13.0%

KPIs

KPIQ3 2024Q3 2025
Leverage Ratio (Net Debt / Adjusted EBITDA, LTM)4.3x 3.3x
Net Debt ($USD Millions)$2,978.0 $2,042.3
Inventory ($USD Millions)$897.2 $991.0
Cash Flow from Operations ($USD Millions)$92.2 $27.6
Free Cash Flow ($USD Millions)$88.1 $22.3

Guidance Changes

MetricPeriodPrevious Guidance (as of Aug 7, 2025)Current (Q3)Change
Net SalesQ3 2025~$900M Withdrawn; actual $891.7M Lower vs guide; guidance withdrawn
Operating Profit (GAAP)Q3 2025~$116M Withdrawn; actual $107.5M Lower vs guide; guidance withdrawn
Operating Profit (Adjusted)Q3 2025~$122M Withdrawn; actual $116.1M Lower vs guide; guidance withdrawn
EPS (GAAP)Q3 2025~$0.14 Withdrawn; actual $0.76 (discrete tax benefit) Surprise to upside (non-operational); guidance withdrawn
EPS (Adjusted)Q3 2025~$0.16 Withdrawn; actual $0.15 Slight miss; guidance withdrawn
FY Net SalesFY 2025~$3.53B No formal guidance; on track to meet prior EPS outlook Guidance withdrawn; qualitative EPS affirmation
FY EPS (GAAP/Adjusted)FY 2025$0.59 / $0.66 No formal guidance; on track (EPS) Withdrawn; qualitative affirmation
FY CFO / FCFFY 2025$350M / $300M Not updated Withdrawn

Earnings Call Themes & Trends

TopicQ1 2025 (Prior-2)Q2 2025 (Prior-1)Q3 2025 (Current)Trend
AI/tech initiativesEmphasis on advanced analytics for assortment and demand planning “Leveraging…AI to drive operational improvement…inventory and assortment management” Continued use implied via productivity initiatives Steady execution
Supply chainRestructuring/optimization to lower fixed costs; diversified east/west capacity Consolidation/optimization actions; margin support Cost savings continue; mix headwinds from transition services revenue Savings up; mix pressure
Tariffs/macroPlan to fully mitigate tariffs; impact not until Q4; U.S. content exempt Surgical pricing + offsets; customer conversations ongoing Inventory increase largely due to tariffs Mitigation ongoing; tariff-driven inventory
Product performanceBasics +LSD, Active +MSD, New +60%; Intimates down mid-teens Basics +LSD, Active ~+30%, New +165%; Intimates headwinds Strong BTS; POS improved monthly; U.S. sales -4.5% on order timing; Hanes share gains Basics/Active strength; Intimates weak
Regional trendsIntl +4% cc; U.S. -1% Intl -3% reported; flat cc; margin down on promo/mix/FX Intl -8% reported (-6% cc); Japan up, Americas/Australia down; margin -230 bps Intl pressure; Japan bright spot
Regulatory/legal——Pending Gildan acquisition; no call hosted M&A overhang
Brand investment/innovationElevated brand investment and innovation driving growth Continued elevated investment; new categories (loungewear, scrubs) Investment continues; market share gains Sustained investment

Management Commentary

  • “Our top-line results for the quarter reflect an unanticipated late quarter shift in replenishment orders at one of our large U.S. retail partners; however, we saw underlying fundamentals of our business continue to improve in the quarter… We are also pleased with our strong back-to-school season as the Hanes brand continued to gain market share.” — CEO Steve Bratspies .
  • “The continued execution of our cost savings initiatives drove operating profit growth and operating margin expansion… generate a 25% increase in adjusted earnings per share in the quarter.” — CEO Steve Bratspies .
  • “We will not be hosting a conference call… and will not be providing guidance going forward due to the pending transaction [with Gildan].” — Company statement .
  • Prior quarter: “We’re leveraging advanced analytics with the use of AI to drive operational improvement around the globe, including inventory and assortment management.” — CEO Steve Bratspies .

Q&A Highlights

  • Tariff timing and mitigation: Costs begin flowing through Q4; multiple levers (cost cuts, pricing, supply chain shifts) support full mitigation and are built into outlook .
  • Pricing in mass channel: Strategic, surgical pricing planned; confidence supported by brand strength and innovation; prior pricing has held .
  • International profitability gap: Heavier retail-fixed cost base; top-line leverage critical; seasonal 4Q volume expected to improve margins .
  • Input costs: Cotton is a relatively small portion of COGS; broader raw material and productivity tailwinds drove GM expansion; full-year GM up ~55 bps expected .
  • Competitive dynamics: Private label losing share in men’s underwear; mixed in women’s; branded innovation and retailer partnerships remain core defense .

Estimates Context

  • Versus S&P Global consensus for Q3: Revenue $905.3M* vs actual $891.7M (miss); Primary EPS $0.1609* vs adjusted EPS $0.15 (miss). GAAP EPS was $0.76 due to a discrete tax benefit and is not indicative of core earnings power .
  • Guidance-to-actual framing: Adjusted OP and EPS modestly below the Q2 guided levels; mix and late-quarter orders were key drivers .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Adjusted earnings power modestly missed consensus and guided levels, while GAAP EPS was inflated by a non-recurring tax benefit; focus on adjusted EPS ($0.15) and adjusted OP ($116.1M) for core trend analysis .
  • Margin structure remains improved YoY, but mix headwinds (transition services revenue, Intl softness) and late-quarter order timing limited sequential performance; watch mix normalization in Q4 .
  • U.S. fundamentals solid: sequential POS improvement, strong BTS, and Hanes share gains support near-term sell-through; pricing actions are expected to offset tariff impacts .
  • International remains a swing factor: Japan strength vs Americas/Australia headwinds, with seasonal leverage in Q4 potentially aiding margin recovery .
  • Balance sheet progress (3.3x leverage) and prior refinancing enhance flexibility; however, Q3 CFO/FCF were soft—monitor working capital and cash conversion in Q4 .
  • Corporate actions: Pending Gildan acquisition removed formal guidance and call, creating a visibility gap; M&A closure, regulatory steps, and integration expectations are key stock catalysts .
  • Near-term trading setup: Watch holiday demand, tariff/price pass-through, Q4 mix, and M&A milestones; any confirmation of tariff mitigation and strong POS could drive estimate revisions.

Additional Notes

  • Non-GAAP adjustments included restructuring and other action-related charges; GAAP-to-non-GAAP reconciliations provided in company tables .
  • Company reiterated being on track to meet prior full-year EPS outlook, but withdrew formal guidance due to the pending transaction; investors should anchor on underlying operational KPIs and adjusted earnings .