The stock of HanesBrands Inc. climbed 18% as cost reductions, including corporate job cuts, are accelerating and improving the outlook for profitability.
The Winston-Salem-based maker of Hanes clothing and Bali intimate wear increased its full-year profit and cash flow. It forecast adjusted per-share earnings from continuing operations of about 39 cents, up from its August forecast of approximately 31 cents to 37 cents.
Early next year, Hanesbrands plans to relocate its Winston-Salem headquarters to a smaller space downtown as Chief Executive Officer Steve Bratspies reduces costs and plows savings into innovation and wider distribution of its most profitable brands. Among cuts, the company cited in its earnings release today a reduction of “corporate headcount and overhead,” without a specific number of firings.
“We have strong visibility to continued profit and cash flow improvement for this year and beyond,” Bratspies said on an analysts’ call.
Costs for “headcount actions and related severance charges” accelerated in the 12 months through September, climbing to $19 million in the period from $13 million over 12 months ended Sept. 30, 2023, according to a securities filing. Spokeswoman Nicole Ducouer said the company wouldn’t provide additional information about job cuts.
Proceeds from the recent sale of its Champion casual wear brand put Hanesbrands on track to pay down about $1 billion of debt in the second half of the year.
This past summer, the company exited its U.S.-based outlet store business, as part of its effort to generate more consistent sales and boost profits and cash generation. For the full year, the company expects to produce cash flow from operations of about $250 million in 2004, an increase of $50 million from its August projection.
HanesBrands closed Thursday at $8.38, up $1.28.
