HanesBrands, Inc. reiterated its full-year 2025 guidance, which includes its expected impacts from U.S. tariffs after reporting better-than-expected first-quarter results.

Sales in the first quarter were $760 million, an increase of 2.1 percent over the prior year and consistent with the prior year on an organic constant-currency basis. Guidance had called for sales of $350 million. Adjusted operating profit increased 61 percent to $81 million, ahead of guidance of $65 million. GAAP earnings per share (EPS) increased approximately 145 percent over the prior year to 4 cents. Adjusted EPS increased 240 percent to 7 cents compared with guidance of 2 cents.

“We delivered another strong quarter, including revenue, operating profit and earnings per share that exceeded our expectations as we continue to see the benefits of our growth strategy and prior transformation initiatives,” said Steve Bratspies, CEO. “We also reiterated our full-year outlook, which now reflects our expected impact from U.S. tariffs, as the current environment presents challenges but also creates real revenue opportunities. We’re confident we can fully mitigate the cost headwinds as we have many levers to pull, including further cost reductions and pricing actions. We’re also actively pursuing new revenue opportunities, which we believe we’re in an advantaged position to capture given our western hemisphere supply chain speed and capabilities matched with our strong retailer relationships.”

First-Quarter 2025 Results

Net Sales from continuing operations were $760 million.

  • Net Sales increased 2.1 percent compared to the prior year.
  • On an organic constant-currency basis, Net Sales were consistent with those from the previous year.

Gross Profit and Gross Margin increased year-over-year, driven by lower input costs, the benefits from cost savings initiatives and assortment management.

  • The company continued its consolidation and other optimization actions in its supply chain to lower fixed costs, increase efficiencies, further improve customer service, and in-stocks with lower inventory levels. The company expects these actions to drive continued benefits in 2025.
  • Gross Profit increased 6 percent to $317 million and Gross Margin increased 170 basis points to 41.7 percent compared to the prior year.
  • Adjusted Gross Profit increased 6 percent to $316 million, and Adjusted Gross Margin increased 165 basis points to 41.6 percent compared to the prior year.
  • Adjusted Gross Profit and Adjusted Gross Margin exclude certain costs related to restructuring and other action-related charges.

Selling, General and Administrative (SG&A) Expenses, as a percentage of net sales, decreased compared to the prior year, driven by the benefits from cost savings initiatives and disciplined expense management, which more than offset a 50 basis point increase in planned, strategic brand investments.

  • The company continued its strategic actions to improve its processes and lower fixed costs and expects the savings from these actions to continue to build through the year.
  • SG&A Expenses were $237 million, or 31.2 percent of net sales, representing a decrease compared to the prior year of 10 percent and 400 basis points, respectively.
  • Adjusted SG&A Expenses were $235 million, or 31.0 percent of net sales, which represents a decrease of 5 percent and 225 basis points, respectively.
  • Adjusted SG&A Expenses exclude certain costs related to restructuring and other action-related charges.

Operating Profit and Operating Margin increased over the prior year, driven by gross margin improvement and lower SG&A expenses.

  • Operating Profit increased 126 percent to $80 million, and Operating Margin increased 575 basis points to 10.5 percent as compared to the prior year.
  • Adjusted Operating Profit increased 61 percent to $81 million, and Adjusted Operating Margin increased 390 basis points to 10.7 percent 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 increased $1 million over the prior year to $61 million, driven by $10 million of expenses associated with the company’s refinancing of its 2026 maturities.
  • Adjusted Interest and Other Expenses decreased $9 million, or 15 percent, compared to the prior year to $51 million, driven primarily by lower interest expense due to lower debt balances.
  • Adjusted Interest and Other Expenses exclude certain costs related to restructuring and other action-related charges.

Tax Expense

  • Tax Expense and Adjusted Tax Expense were $5 million compared to $9 million in the prior year.
  • Effective Tax Rate was 26.8 percent compared to 35.4 percent in the first quarter of 2024.
  • Adjusted Tax Rate was 17.0 percent compared to (92.5 percent) in the prior year.
  • The company’s effective tax rate for 2025 and 2024 does not reflect the U.S. statutory rate due to valuation allowances against certain net deferred tax assets.

Earnings Per Share

  • Income from continuing operations totaled $14 million, or 4 cents per diluted share, in the first quarter of 2025; this compares to a loss from continuing operations of ($33) million, or 9 cents per diluted share, in first-quarter 2024.
  • Adjusted Income from continuing operations totaled $25 million, or 7 cents per diluted share, in the first quarter of 2025; this compares to a loss from continuing operations of ($18) million, or 5 cents per diluted share, last year.

First-Quarter 2025 Business Segment Summary

  • U.S. net sales decreased 1 percent compared to the prior year. The company continued to focus on its core growth fundamentals, including innovation, increased brand investments, and incremental programming opportunities. These fundamentals delivered year-over-year growth in its Basics, Active and New businesses. Like the innerwear market, this growth was more than offset by continued headwinds in the Intimate Apparel business. Operating margin of 20.9 percent increased 285 basis points over the prior year. Benefits from cost savings initiatives, lower input costs and a favorable product mix drove the increase.
  • International net sales decreased 2 percent on a reported basis, which included a $12 million headwind from unfavorable foreign exchange rates. International sales increased 4 percent on a constant currency basis compared to the prior year, as sales grew in Australia and Asia and were consistent with the prior year in the Americas. Operating margin of 11.5 percent increased 310 basis points compared to the prior year, driven primarily by a favorable mix, the benefits from cost savings initiatives, and lower input costs.

Balance Sheet and Cash Flow

  • Based on the calculation, defined in the company’s senior secured credit facility, the Leverage Ratio at the end of first-quarter 2025 was 3.6 times on a net debt-to-adjusted EBITDA basis, which was below the prior year’s 5.0 times.
  • Inventory at the end of first-quarter 2025 of $977 million decreased 5 percent, or $54 million, year-over-year. The decrease was driven predominantly by the benefits of its inventory management capabilities, including SKU discipline and lifecycle management, lower input costs and improved sales trends.
  • Cash Flow from Operations was ($108) million in first-quarter 2025, compared to $26 million last year, as the company built seasonal inventory ahead of its planned back-to-school programs with key retail partners. Free Cash Flow for the quarter was ($119) million as compared to $6 million last year.

Second-Quarter and Full-Year 2025 Financial Outlook
The company provided guidance on tax expense due to the expected fluctuation of its quarterly tax rate, stemming from the deferred tax reserve matter previously disclosed in the fourth quarter of 2022. Significantly, the reserve does not impact cash taxes. Some portion of the reserve may reverse in future periods. The company’s guidance reflects its expected impact from U.S. tariffs and is subject to change in the future.

For Fiscal year 2025, which ends January 3, 2026, and includes a 53rd week, the company currently expects:

  • Net Sales from continuing operations increase from approximately $3.47 billion to $3.52 billion, which includes projected headwinds of approximately $60 million from changes in foreign currency exchange rates. At the midpoint, Net Sales are expected to be consistent with the prior year on a reported basis and increase approximately 1 percent on an organic constant-currency basis.
  • GAAP Operating Profit from continuing operations of approximately $425 million to $440 million.
  • Adjusted Operating Profit from continuing operations of approximately $450 million to $465 million, which excludes pretax charges for restructuring and other action-related charges of approximately $25 million. The operating profit outlook includes a projected headwind of approximately $8 million from changes in foreign currency exchange rates.
  • GAAP and Adjusted Interest expense of approximately $190 million.
  • GAAP Other expenses of approximately $46 million. Adjusted Other expenses of approximately $36 million, which excludes approximately $10 million of pretax charges related to first-quarter 2025 refinancing activities.
  • GAAP and Adjusted Tax expense of approximately $40 million.
  • GAAP Earnings Per Share from continuing operations of approximately 42 cents to 46 cents.
  • Adjusted Earnings Per Share from continuing operations of approximately 51 cents to 55 cents.
  • Cash Flow from Operations of approximately $350 million.
  • Capital investments of approximately $65 million comprised roughly of $50 million of capital expenditures and approximately $15 million of cloud computing arrangements.
  • Free Cash Flow of approximately $300 million.
  • Fully diluted shares outstanding of approximately 359 million.

For second-quarter 2025, which ends June 28, 2025, the company currently expects:

  • Net Sales from continuing operations of approximately $970 million which includes projected headwinds of roughly $15 million from changes in foreign currency exchange rates. Net Sales are expected to be relatively consistent with the prior year on both a reported and organic constant currency basis.
  • GAAP Operating Profit from continuing operations of approximately $129 million.
  • Adjusted Operating Profit from continuing operations of approximately $136 million, which excludes pretax charges for restructuring and other action-related charges of approximately $7 million. The operating profit outlook includes a projected headwind of roughly $2 million from changes in foreign currency exchange rates.
  • GAAP and Adjusted Interest expense of approximately $50 million.
  • GAAP and Adjusted Other expenses of approximately $9 million.
  • GAAP and Adjusted Tax expense of approximately $14 million.
  • GAAP Earnings Per Share from continuing operations of approximately 16 cents.
  • Adjusted Earnings Per Share from continuing operations of approximately 18 cents.
  • Fully diluted shares outstanding of approximately 357 million.

The company’s brands include Hanes, Bonds, Maidenform, and Bali.