HanesBrands Inc. (NYSE:HBI) Reports Mixed Q3 2025 Results with Earnings Growth and Revenue Miss

HanesBrands Inc. (NYSE:HBI) reported third-quarter 2025 financial results that presented a mixed picture, with earnings growth overshadowed by revenue that fell short of market expectations. The apparel company's performance highlights ongoing challenges in its sales trajectory while demonstrating progress in profitability and cost management.

Earnings and Revenue Performance

The company's financial results for the quarter revealed a divergence between top-line performance and bottom-line execution. While HanesBrands managed to grow its adjusted earnings, revenue figures disappointed analysts who had been anticipating stronger sales growth.

• Revenue: $891.7 million, representing a 1.0% decrease compared to the prior year period
• Analyst Revenue Estimate: $904.8 million, indicating the company fell approximately $13 million short of expectations
• Adjusted EPS: $0.15 per share, compared to $0.12 per share in the same quarter last year
• Analyst EPS Estimate: $0.163 per share, resulting in the company missing estimates by approximately 8%

The revenue decline was primarily attributed to what CEO Steve Bratspies described as "an unanticipated late quarter shift in replenishment orders at one of our large U.S. retail partners." On a constant currency organic basis, which excludes foreign exchange impacts and the "other" segment, net sales decreased 4.9% compared to the prior year.

Market Reaction and Price Action

Investors responded negatively to the earnings release, particularly focusing on the revenue miss. In pre-market trading following the announcement, HanesBrands stock declined approximately 1.5%, reflecting market disappointment with the company's inability to meet sales targets despite the improved profitability.

The stock had already been under pressure in recent weeks, declining approximately 2.9% over the past week and 5.5% over the past month leading into the earnings announcement. The immediate negative reaction suggests investors are concerned about the company's sales momentum amid challenging retail conditions.

Operational Highlights and Cost Management

Despite the revenue challenges, HanesBrands demonstrated significant progress in several operational areas, particularly in cost control and profitability metrics.

• Operating Margin Expansion: Operating profit increased 14% to $108 million, with operating margin expanding 160 basis points to 12.1%
• SG&A Reduction: Selling, general and administrative expenses decreased 8.4% to $255.9 million, reflecting benefits from cost savings initiatives
• Debt Management: Leverage ratio improved to 3.3 times on a net debt-to-adjusted EBITDA basis, down from 4.3 times in the prior year
• Tax Benefit Impact: The company recorded a $0.64 per share discrete tax benefit primarily related to the release of a valuation allowance for certain U.S. deferred tax assets

Segment Performance and Geographic Trends

The company's performance varied significantly across its business segments and geographic regions, revealing both strengths and challenges in different markets.

U.S. Segment:

• Net sales decreased 4.5% due to ordering pattern shifts at a major retail partner
• Operating margin improved 20 basis points to 22.2%
• Unit point-of-sale trends improved sequentially each month during the quarter
• Hanes brand gained market share during the key back-to-school period

International Segment:

• Net sales decreased 8% on a reported basis and 6% on a constant currency basis
• Operating margin decreased 230 basis points to 10.2%
• Performance varied by region with growth in Japan but challenges in the Americas and Australia

Forward Outlook and Analyst Expectations

Looking ahead, analysts are estimating revenue of $883.3 million for the fourth quarter of 2025 and full-year 2025 sales of $3.56 billion. The company's focus remains on completing the previously announced transaction with Gildan Activewear Inc., which management highlighted as a key priority.

The company's inventory position increased 10% year-over-year to $991 million, with the majority of the increase driven by tariff impacts. Free cash flow for the quarter was $22 million, down from $88 million in the same period last year, reflecting working capital investments.

For more detailed earnings analysis and future estimates, investors can review additional information on the HanesBrands earnings page.

Disclaimer: This article presents factual information from HanesBrands' earnings release and analyst estimates for educational purposes only. It does not constitute investment advice or a recommendation to buy or sell any security. Investors should conduct their own research and consult with financial advisors before making investment decisions.