HanesBrands, Inc. (HBI) CEO Steve Bratspies said the company’s top-line results for the third quarter reflect an unanticipated late-quarter shift in replenishment orders at one of HBI’s large U.S. retail partners.

“However, we saw underlying fundamentals of our business continue to improve in the quarter,” Bratspies said in the company’s Q3 earnings release. “Our inventory position at retail is strong. We’re encouraged by our unit point-of-sale trends, which sequentially improved each month during the quarter. We are also pleased with our strong back-to-school season as the Hanes brand continued to gain market share,” said. “In addition, 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 percent increase in adjusted earnings per share in the quarter. Looking forward, our team remains focused on driving the business and the successful completion of the transaction with Gildan.”

Montreal-based Gildan agreed to acquire Hanesbrands for $2.2 billion in stock and cash, representing an enterprise value, including debt, of approximately $4.4 billion. The transaction is expected to close in late 2025 or early 2026.

Glenn Chamandy, Gildan Activewear’s president and CEO, told the market during an August conference call that Gildan’s proposed acquisition of HanesBrands promises to offer at least $200 million in cost synergies over the next three years, but he said the biggest growth opportunity is expanding the 125-year-old Hanes brand in activewear, a category where Gildan excels.

He also expects Hanes’ team to help Gildan’s owned brands, which include Gildan, American Apparel, Comfort Colors, Goldtoe, and Peds, expand at the retail level.

“We’ll be bringing together Gildan’s leadership in activewear with Hanes’ leading innerwear retail presence and expertise,” Chamandy said on the mid-August call. “The combination will enhance our go-to-market capabilities and our continued growth in all channels. It will accelerate Gildan’s retail presence with its portfolio of brands, while supporting the growth of the Hanes brand in activewear in all retail channels.”

Net Sales
Net sales from continuing operations dipped 1 percent year-over-year (y/y) to $891.7 million. On an organic constant-currency basis, net sales decreased 4.9 percent compared to the prior-year third quarter.

U.S. net sales decreased 4.5 percent y/y, reportedly driven by unanticipated shifts in ordering patterns at one of HBI’s large retail partners, which impacted late-quarter replenishment orders. Despite the near-term sales challenge, the company saw unit point-of-sale trends sequentially improve each month during the quarter as it performed well during the key back-to-school period. The company continued to focus on its core growth fundamentals, including new businesses, innovation, brand investments, and incremental programming opportunities, which generated year-over-year market share gains for the Hanes brand during the quarter.

International net sales decreased 8 percent y/y on a reported basis, which included a $4 million headwind from unfavorable foreign exchange rates, and decreased 6 percent on a constant-currency basis as compared to the prior year.

  • Japan constant-currency net sales increased, reportedly driven by strength in the Hanes brand.
  • The Americas region experienced a decrease due to the challenging macroeconomic environment.
  • Australia decreased as strong growth in the Bonds brand across all channels was more than offset by continued headwinds in the intimate apparel market.

Gross Profit / Gross Margin
Gross profit and gross margin decreased compared to Q3 2024 as unfavorable business and customer mix more than offset lower input costs and the benefits from cost savings and productivity initiatives. With respect to the unfavorable business mix, greater-than-expected transition services revenue, which is reported in the Other segment, generated a nearly 160 basis point year-over-year headwind to margins in the quarter.

  • Gross profit decreased 3 percent to $363 million, and Gross Margin decreased 70 basis points to 40.8 percent as compared to the prior year.
  • Adjusted gross profit decreased 3 percent to $364 million, and Adjusted Gross Margin decreased 80 basis points to 40.8 percent as compared to the prior year.
  • Adjusted gross profit and Adjusted gross margin exclude certain costs related to restructuring and other action-related charges.

Operating Profit / Operating Margin
Operating profit and operating margin increased over the prior year, primarily due to lower SG&A expenses. SG&A expenses decreased compared to the prior year, both in absolute terms and as a percentage of net sales, due to the benefits of cost savings initiatives and disciplined expense management. Operating profit increased 14 percent to $108 million, and operating margin increased 160 basis points to 12.1 percent as compared to the prior year.

  • U.S. operating margin of 22.2 percent increased 20 basis points y/y, reportedly driven by lower input costs and the benefits from cost savings and productivity initiatives.
  • International operating margin of 10.2 percent decreased 230 basis points y/y, reportedly driven primarily by lower sales volume and increased brand investment, which more than offset the benefits from cost savings initiatives and lower input costs.

Adjusted operating profit increased 3 percent to $116 million, and Adjusted operating margin increased 45 basis points to 13.0 percent as compared to the prior year.

Adjusted operating profit and adjusted operating margin exclude certain costs related to restructuring and other action-related charges.

Interest Expense and Other Expenses
Interest and other expenses decreased by $3 million over the prior year to $55 million, primarily driven by lower debt balances.

Earnings Per Share
Income from continuing operations totaled $272 million, or 76 cents per diluted share, in the third quarter of 2025, inclusive of a 64 cents per share discrete tax benefit primarily related to the release of a valuation allowance established in 2022 for certain U.S. deferred tax assets. This reportedly compares to income from continuing operations of $25 million, or 7 cents per diluted share, in the third-quarter 2024.

Adjusted income from continuing operations totaled $52 million, or 15 cents per diluted share, in the third quarter of 2025, compared to Adjusted income from continuing operations of $44 million, or 12 cents per diluted share, in Q3 last year.

Balance Sheet Summary and Cash Flow
Based on the calculation as defined in the company’s senior secured credit facility, the Leverage Ratio at the end of third quarter 2025 was 3.3x on a net debt-to-adjusted EBITDA basis, which was below the prior year’s 4.3x.

Inventory at the end of the third quarter 2025 of $991 million increased 10 percent, or $94 million, year-over-year, with the majority of the increase driven by the impact from tariffs. Year-to-date, the Company further reduced its SKU count by nearly 5 percent, driven by its inventory management capabilities, including SKU discipline and lifecycle management.

Cash Flow from operations was $28 million in the third quarter 2025, compared to $92 million last year. Free Cash Flow for the quarter was $22 million as compared to $88 million last year.

Image courtesy HanesBrands Inc.