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Why Hanesbrands Stock Soared 20% in January

By John Ballard – Updated Apr 16, 2019 at 5:25PM

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Holiday retail sales were the best in six years, which was a positive sign for the maker of Champion athletic wear.

What happened

Shares of Hanesbrands (HBI 4.30%) gained 19.6% in value last month, according to data provided by S&P Global Market Intelligence.

Weak operating performance and concerns about the global economy drove Hanesbrands stock down 40% in 2018. But the sell-off might have gone too far, as there was positive news about the strength of sales in the retail industry during the holidays, which helped to prop up the stock in January.

A brightly lit sign with the Champion brand logo displayed.


So what

Supporting the stock's gain last month were reports that retail sales during the holiday quarter were the best in six years. However, Hanesbrands' innerwear segment performed poorly in 2018. The business of selling socks and underwear is highly competitive, especially with retailers like Target investing in private-label brands. 

But a strong holiday shopping season may have benefited Hanesbrands' Champion athletic wear brand, which is where the company is pinning its future growth. Champion sales were up 30% year over year in the third quarter, and up 40% excluding sales to mass retailers. 

Now what

A strong consumer spending backdrop during the fourth quarter might keep the momentum going for Champion. Investors will know more when Hanesbrands reports earnings results on Thursday, Feb. 7. 

Analysts expect the company to grow revenue 3.9% year over year to $1.71 billion in the fourth quarter. Adjusted earnings per share are expected to decline to $0.46 compared to $0.52 in the year-ago quarter. 

Check out the latest Hanesbrands earnings call transcript.  

John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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