HanesBrands (NYSE:HBI) shares gained nearly 5% in the opening session today after the apparel company announced its third-quarter results. Revenue declined by 9.5% year-over-year to $1.51 billion, missing expectations by $30 million. EPS of $0.10 also missed the cut by $0.01.
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The company is witnessing market share gains in its U.S. Innerwear vertical, driven by a 40% growth from new product innovation. At the same time, sales in U.S. Activewear and Global Champion brand witnessed a marked decline during the quarter.
Amid a difficult macroeconomic backdrop, HanesBrands is focusing on driving cash flow generation and paring down debt. Further, the company has commenced an evaluation of strategic alternatives for its Global Champion business.
HBI’s gross margin contracted by 260 basis points to 31.1% even as input cost inflation continued to moderate. The company lowered its inventory by 29% year-over-year, leading to $155 million in operating cash flow for the quarter. Further, HBI has pared down its debt by $270 million so far this year and expects to lower debt by over $400 million for the year.
With an anticipated muted global consumer demand scenario, HanesBrands expects net sales of about $5.70 billion and an adjusted EPS of $0.12 for Fiscal year 2023. For the upcoming quarter, the company expects an adjusted EPS of $0.09 on $1.36 billion in net sales.
What Is the Target Price for HBI Stock?
Overall, the Street has a Hold consensus rating on HanesBrands. The average HBI price target of $5.10 implies a modest 13% potential upside.
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