[10-Q] Hanesbrands, Inc. Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 28, 2025
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number: 001-32891
(Exact name of registrant as specified in its charter)
| (State of incorporation) | (I.R.S. employer identification no.) | ||||||||||
| (Address of principal executive offices) | (Zip code) | ||||||||||
(336 ) 519-8080
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | ||||||||||||||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company | |||||||||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 1, 2025, there were 353,731,138 shares of the registrant’s common stock outstanding.
Table of Contents
TABLE OF CONTENTS
| Page | ||||||||
Forward-Looking Statements | 1 | |||||||
PART I | ||||||||
| Item 1. | Financial Statements (unaudited): | |||||||
Condensed Consolidated Statements of Operations for the quarters and six months ended June 28, 2025 and June 29, 2024 | 2 | |||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) for the quarters and six months ended June 28, 2025 and June 29, 2024 | 3 | |||||||
Condensed Consolidated Balance Sheets at June 28, 2025, December 28, 2024 and June 29, 2024 | 4 | |||||||
Condensed Consolidated Statements of Stockholders’ Equity for the quarters and six months ended Jun 28, 2025 and June 29, 2024 | 5 | |||||||
Condensed Consolidated Statements of Cash Flows for the six months ended June 28, 2025 and June 29, 2024 | 7 | |||||||
Notes to Condensed Consolidated Financial Statements | 8 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 45 | ||||||
| Item 4. | Controls and Procedures | 45 | ||||||
| PART II | ||||||||
| Item 1. | Legal Proceedings | 46 | ||||||
| Item 1A. | Risk Factors | 46 | ||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 46 | ||||||
| Item 3. | Defaults Upon Senior Securities | 46 | ||||||
| Item 4. | Mine Safety Disclosures | 46 | ||||||
| Item 5. | Other Information | 46 | ||||||
| Item 6. | Exhibits | 47 | ||||||
Signatures | 49 | |||||||
Table of Contents
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “could,” “will,” “expect,” “outlook,” “potential,” “project,” “estimate,” “future,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding our intent, belief and current expectations about our strategic direction, prospects and future results are forward-looking statements and are inherently subject to risks and uncertainties that could cause actual results to differ materially from those implied or expressed by such statements. These risks and uncertainties include, but are not limited to: trends associated with our business; our ability to successfully implement our strategic plans, including our supply chain restructuring and consolidation and other cost savings initiatives; the rapidly changing retail environment and the level of consumer demand; the effects of any geopolitical conflicts (including the ongoing Russia-Ukraine conflict and Middle East conflicts) or public health emergencies or severe global health crises, including effects on consumer spending, global supply chains, critical supply routes and the financial markets; our ability to deleverage on the anticipated time frame or at all; any inadequacy, interruption, integration failure or security failure with respect to our information technology; future intangible assets or goodwill impairment due to changes in our business, market condition or other factors; significant fluctuations in foreign exchange rates; legal, regulatory, political and economic risks related to our international operations, including the imposition of or changes in duties, taxes, tariffs and other charges impacting our products or supply chain, or the threat thereof; our ability to effectively manage our complex international tax structure; and our future financial performance. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements. Such statements speak only as of the date when made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 28, 2024, under the caption “Risk Factors”, and available on the “Investors” section of our corporate website, www.Hanes.com/investors. The contents of our corporate website are not incorporated by reference in this Quarterly Report on Form 10-Q.
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PART I
| Item 1. | Financial Statements | ||||
HANESBRANDS INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Operating profit (loss) | ( | ( | |||||||||||||||||||||
| Other expenses | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes | ( | ( | |||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Income (loss) from continuing operations | ( | ( | |||||||||||||||||||||
| Loss from discontinued operations, net of tax | ( | ( | ( | ( | |||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Earnings (loss) per share - basic: | |||||||||||||||||||||||
| Continuing operations | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Discontinued operations | ( | ( | ( | ( | |||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Earnings (loss) per share - diluted: | |||||||||||||||||||||||
| Continuing operations | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Discontinued operations | ( | ( | ( | ( | |||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Translation adjustments | ( | ||||||||||||||||||||||
| Unrealized gain (loss) on qualifying cash flow hedges, net of tax of $1,634, $358, $1,802 and $(533), respectively | ( | ( | |||||||||||||||||||||
| Unrecognized income from pension and postretirement plans, net of tax of $20, $(34), $141 and $169, respectively | |||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ||||||||||||||||||||||
| Comprehensive income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
| June 28, 2025 | December 28, 2024 | June 29, 2024 | |||||||||||||||
| Assets | |||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Trade accounts receivable, net | |||||||||||||||||
| Inventories | |||||||||||||||||
| Other current assets | |||||||||||||||||
| Current assets held for sale | |||||||||||||||||
| Total current assets | |||||||||||||||||
| Property, net | |||||||||||||||||
| Right-of-use assets | |||||||||||||||||
| Trademarks and other identifiable intangibles, net | |||||||||||||||||
| Goodwill | |||||||||||||||||
| Deferred tax assets | |||||||||||||||||
| Other noncurrent assets | |||||||||||||||||
| Noncurrent assets held for sale | |||||||||||||||||
| Total assets | $ | $ | $ | ||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||
| Accounts payable | $ | $ | $ | ||||||||||||||
| Accrued liabilities | |||||||||||||||||
| Lease liabilities | |||||||||||||||||
| Accounts Receivable Securitization Facility | |||||||||||||||||
| Current portion of long-term debt | |||||||||||||||||
| Current liabilities held for sale | |||||||||||||||||
| Total current liabilities | |||||||||||||||||
| Long-term debt | |||||||||||||||||
| Lease liabilities - noncurrent | |||||||||||||||||
| Pension and postretirement benefits | |||||||||||||||||
| Other noncurrent liabilities | |||||||||||||||||
| Noncurrent liabilities held for sale | |||||||||||||||||
| Total liabilities | |||||||||||||||||
| Stockholders’ equity: | |||||||||||||||||
| Preferred stock (50,000,000 authorized shares; $.01 par value) | |||||||||||||||||
| Issued and outstanding — None | |||||||||||||||||
| Common stock (2,000,000,000 authorized shares; $.01 par value) | |||||||||||||||||
| Issued and outstanding — 353,686,775, 352,541,826 and 351,643,593, respectively | |||||||||||||||||
| Additional paid-in capital | |||||||||||||||||
| Retained earnings | |||||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ( | ||||||||||||||
| Total stockholders’ equity | |||||||||||||||||
| Total liabilities and stockholders’ equity | $ | $ | $ | ||||||||||||||
See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)
| Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances at March 29, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Vesting of restricted stock units and other | ( | — | ( | ||||||||||||||||||||||||||||||||
| Balances at June 28, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances at December 28, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Vesting of restricted stock units and other | ( | — | ( | ||||||||||||||||||||||||||||||||
| Balances at June 28, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Statements of Stockholders’ Equity (Continued)
(in thousands)
(unaudited)
| Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances at March 30, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Vesting of restricted stock units and other | — | ||||||||||||||||||||||||||||||||||
| Balances at June 29, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances at December 30, 2023 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Vesting of restricted stock units and other | ( | — | ( | ||||||||||||||||||||||||||||||||
| Balances at June 29, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Six Months Ended | |||||||||||
June 28, 2025(1) | June 29, 2024(1) | ||||||||||
| Operating activities: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income (loss) to net cash from operating activities: | |||||||||||
| Depreciation | |||||||||||
| Amortization of acquisition intangibles | |||||||||||
| Other amortization | |||||||||||
| Impairment of long-lived assets and goodwill | — | ||||||||||
| Inventory write-down charges | — | ||||||||||
| Loss on extinguishment of debt | |||||||||||
| Loss on sale of businesses and classification of assets held for sale | |||||||||||
| Amortization of debt issuance costs and debt discount | |||||||||||
| Other | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Inventories | ( | ( | |||||||||
| Accounts payable | |||||||||||
| Other assets and liabilities | ( | ||||||||||
| Net cash from operating activities | ( | ||||||||||
| Investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from sales of assets | |||||||||||
| Proceeds from disposition of businesses | |||||||||||
| Net cash from investing activities | ( | ||||||||||
| Financing activities: | |||||||||||
| Borrowings on Term Loan Facilities | |||||||||||
| Repayments on Term Loan Facilities | ( | ( | |||||||||
| Borrowings on Accounts Receivable Securitization Facility | |||||||||||
| Repayments on Accounts Receivable Securitization Facility | ( | ( | |||||||||
| Borrowings on Revolving Loan Facilities | |||||||||||
| Repayments on Revolving Loan Facilities | ( | ( | |||||||||
| Repayments on Senior Notes | ( | ||||||||||
| Payments to amend and refinance credit facilities | ( | ( | |||||||||
| Other | ( | ( | |||||||||
| Net cash from financing activities | ( | ||||||||||
| Effect of changes in foreign exchange rates on cash | ( | ||||||||||
| Change in cash and cash equivalents | |||||||||||
| Cash and cash equivalents at beginning of year | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Balances included in the Condensed Consolidated Balance Sheets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Cash and cash equivalents included in current assets held for sale | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
(1)The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and liabilities. Accordingly, the Condensed Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.
Capital expenditures included in accounts payable at June 28, 2025 and December 28, 2024 were $2,099 and $6,231 , respectively.
See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements
(amounts in thousands, except per share data)
(unaudited)
(1) Basis of Presentation
These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management believes that the disclosures made are adequate for a fair statement of the results of operations, financial condition and cash flows of Hanesbrands Inc. and its consolidated subsidiaries (the “Company” or “Hanesbrands”). In the opinion of management, the condensed consolidated interim financial statements reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. The preparation of condensed consolidated interim financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates.
These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year or any future period.
Discontinued Operations
In 2024, the Company reached the decision to exit the global Champion business, U.S.-based outlet store business and the Champion Japan business. The Company determined these businesses represent multiple components of a single strategic plan that met held-for-sale and discontinued operations accounting criteria in 2024. Accordingly, the Company began to separately report the results of these businesses as discontinued operations in its Condensed Consolidated Statements of Operations and to present the related assets and liabilities as held for sale in its Condensed Consolidated Balance Sheets. These changes have been applied to all periods presented.
Unless otherwise noted, discussion within these notes to the condensed consolidated interim financial statements relates to continuing operations. See Note “Assets and Liabilities of Businesses Held for Sale” for additional information about discontinued operations. In addition, the Company realigned its reportable segments in the second quarter of 2024 and has applied this change to all periods presented. See Note “Business Segment Information” for additional information about reportable segments.
Goodwill and Indefinite-lived Intangible Assets
Goodwill and indefinite-lived intangible assets are evaluated for impairment at least annually as of the first day of the third quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or intangible asset below its carrying value. In the quarter ended June 28, 2025, the Company identified a triggering event within one of the Company’s indefinite-lived trademarks within the Australian business. As a result, the Company performed a quantitative assessment utilizing an income approach to estimate the fair value of the indefinite-lived trademark. The most significant assumptions used to estimate the fair value of the indefinite-lived trademark include the weighted average cost of capital, revenue growth rate, terminal growth rate and operating profit margin.
While the Company’s analysis indicated a meaningful decline in the fair value cushion above the carrying value, it was determined that no impairment existed for the indefinite-lived trademark as of the quarter ended June 28, 2025. The decline in this trademark was driven by continued macroeconomic pressures impacting consumer spending in Australia and resulted in a fair value that approximated the carrying value at the time the analysis was performed. As a result, this trademark is considered to be at a high risk for future impairment if economic conditions worsen or earnings and operating cash flows do not recover as currently estimated by management. As of June 28, 2025, the carrying value of this trademark was $227,968 , which is reflected in the “Trademarks and other identifiable intangibles, net” line in the Condensed Consolidated Balance Sheets.
Reclassifications
Certain prior year amounts in the Condensed Consolidated Statements of Cash Flows, in Note “Revenue Recognition” and in Note “Business Segment Information” have been reclassified to conform with the current year presentation.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(2) Recent Accounting Pronouncements
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which is intended to enhance transparency into the nature and function of expenses. The new accounting rules require that on an annual and interim basis, entities disclose disaggregated operating expense information about specific categories, including purchases of inventory, employee compensation, depreciation, amortization and selling expense. In January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date,” which clarifies the initial effective date for non-calendar year-end entities. The new accounting rules will be effective for the Company beginning with the annual period of 2027 and interim periods beginning in 2028. Early adoption is permitted. This ASU can be adopted either (i) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (ii) retrospectively to any or all prior reporting periods presented in the financial statements. While the new accounting rules will not have any impact on the Company’s financial condition, results of operations or cash flows, the adoption of the new accounting rules will result in additional disclosures. The Company is currently assessing the impact of this guidance on its disclosures.
Income Taxes
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The new accounting rules on income tax disclosures require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit as separated between domestic and foreign and (3) income tax expense or benefit from continuing operations as separated by federal, state, and foreign. The new accounting rules also require entities to disclose their income tax payments to federal, state and local jurisdictions, and international, among other changes. The new accounting rules became effective for the Company for the annual periods beginning in 2025 and should be applied on a prospective basis, but retrospective application is permitted. Early adoption is permitted. While the new accounting rules will not have any impact on the Company’s financial condition, results of operations or cash flows, the adoption of the new accounting rules will result in additional disclosures. The Company will adopt this ASU 2023-09 in its fourth quarter of 2025 using a prospective transition method.
Measurement of Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the FASB issued ASU 2025-05, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”, which introduces a practical expedient for the application of the current expected credit loss (“CECL”) model to current accounts receivable and contract assets. The amendment will be effective for the Company beginning in the first quarter of 2026 on a prospective basis. Early adoption is permitted. The Company is currently assessing the impact of this guidance on the Company’s financial condition, results of operations and disclosures.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(3) Assets and Liabilities of Businesses Held for Sale
Assets and liabilities of businesses classified as held for sale in the Condensed Consolidated Balance Sheets consist of the following:
| June 28, 2025 | December 28, 2024 | June 29, 2024 | |||||||||||||||
Global Champion business - discontinued operations | $ | $ | $ | ||||||||||||||
Champion Japan business - discontinued operations | |||||||||||||||||
| U.S.-based outlet store business - discontinued operations | |||||||||||||||||
| Current assets held for sale | $ | $ | $ | ||||||||||||||
Global Champion business - discontinued operations | $ | $ | $ | ||||||||||||||
Champion Japan business - discontinued operations | |||||||||||||||||
| U.S.-based outlet store business - discontinued operations | |||||||||||||||||
| Noncurrent assets held for sale | $ | $ | $ | ||||||||||||||
Global Champion business - discontinued operations | $ | $ | $ | ||||||||||||||
Champion Japan business - discontinued operations | |||||||||||||||||
| U.S.-based outlet store business - discontinued operations | |||||||||||||||||
| Current liabilities held for sale | $ | $ | $ | ||||||||||||||
Global Champion business - discontinued operations | $ | $ | $ | ||||||||||||||
Champion Japan business - discontinued operations | |||||||||||||||||
| U.S.-based outlet store business - discontinued operations | |||||||||||||||||
| Noncurrent liabilities held for sale | $ | $ | $ | ||||||||||||||
Discontinued Operations
In 2024, the Company determined that the exit of the global Champion business, U.S.-based outlet store business and the Champion Japan business represent multiple components of a single strategic plan that met held-for-sale and discontinued operations accounting criteria and began to separately report the results of these businesses as discontinued operations in its Condensed Consolidated Statements of Operations and to present the related assets and liabilities as held for sale in its Condensed Consolidated Balance Sheets. The Company completed the exit of the U.S.-based outlet store business in July 2024 and completed the sale of the intellectual property and certain operating assets of the global Champion business in the fourth quarter of 2024 on September 30, 2024 (“Initial Closing”). The Company continued to operate the Champion business in certain sectors and geographies through a transition period that ended on January 31, 2025 (“Deferred Business”). On January 31, 2025, the Company completed the sale of the Deferred Business (“Deferred Closing”). In December 2024, the Company finalized plans to exit the Champion Japan business and expects to complete the sale of the business within the current fiscal year. The results of these businesses are reported in the “Loss from discontinued operations” line in the Condensed Consolidated Statements of Operations. In addition, certain expenses related to the operations of the global Champion business, the U.S.-based outlet store business and the Champion Japan business were included in general corporate expenses, restructuring and other action-related charges and amortization of intangibles, which were previously excluded from segment operating profit, and have been reclassified to discontinued operations in 2024. These changes have been applied to all periods presented.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Global Champion Business
In the second quarter of 2024, the Company announced that it had reached an agreement to sell the intellectual property and certain operating assets of the global Champion business to Authentic Brands Group LLC (“Authentic”). Pursuant to the agreement, as amended, the Company completed the Initial Closing for the sale of the intellectual property and certain operating assets of the global Champion business to Authentic in the fourth quarter of 2024 on September 30, 2024 in exchange for gross cash proceeds of $857,450 and a receivable of $12,162 , of which $4,161 was received during the six months ended June 28, 2025. In addition, the Company has the potential to receive additional contingent cash consideration of up to $300,000 pursuant to the agreement. The Company continued to operate the Deferred Business through a transition period that ended on January 31, 2025. On January 31, 2025, the Company completed the Deferred Closing for the sale of the Deferred Business. The Company continued certain sales from its supply chain to Authentic and the applicable service recipients on a transitional basis after the sale of the business under a manufacturing and supply agreement that was signed as part of closing the transaction. Additionally, the Company entered into a transitional services agreement pursuant to which the Company provided transitional services including information technology, human resources, finance and accounting services. The Company will continue to provide these services to Authentic and the applicable service recipients over a period of approximately 12 months from the completion of the Initial Closing. The sales and the related profit are included in continuing operations in the Condensed Consolidated Statements of Operations and in Other in Note “Business Segment Information”. The related receivables from Authentic or the applicable service recipients are included in “Trade accounts receivable, net” and “Other current assets” in the Condensed Consolidated Balance Sheets for all periods presented.
On January 31, 2025, the Company completed the Deferred Closing and received gross cash proceeds of $31,020 inclusive of fee reimbursements and other adjustments resulting in net cash proceeds of $29,713 . During the quarter and six months ended June 28, 2025, the Company recognized a loss of $1,131 and $6,093 , respectively, as the Company finalized the Deferred Close and recognized post-close working capital and proceed adjustments. This loss was recorded in “Loss on sale of businesses and classification of assets held for sale” within discontinued operations.
The following table reconciles the net proceeds received from the Deferred Closing for the six months ended June 28, 2025, which are reported in the “Proceeds from disposition of businesses” line within investing activities in the Condensed Consolidated Statements of Cash Flows, to the loss recognized on the global Champion business, which is reported in the “Loss on sale of businesses and classification of assets held for sale” line within operating activities in the Condensed Consolidated Statements of Cash Flows:
| Quarter Ended June 28, 2025 | Six Months Ended June 28, 2025 | ||||||||||
| Net cash proceeds received | $ | $ | |||||||||
| Less: Net carrying value of deferred businesses | ( | ||||||||||
| Less: Working capital and proceed adjustments | ( | ( | |||||||||
Loss on global Champion business | $ | ( | $ | ( | |||||||
While the operations of the global Champion business were reflected within all reportable segments prior to its reclassification to discontinued operations, the U.S. Champion business made up the majority of the Company’s former Activewear segment. See Note “Business Segment Information” for additional discussion regarding realignment of the Company’s reportable segments.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
U.S.-Based Outlet Store Business
In the second quarter of 2024, the Company began actively marketing its U.S.-based outlet store business to prospective buyers. In July 2024, the Company entered into a purchase agreement with Restore Capital (HCR Stores), LLC (“Restore”), an affiliate of Hilco Merchant Resources, LLC, and completed the exit of the U.S.-based outlet store business. Under the purchase agreement, the Company paid Restore $12,000 at closing and an additional $3,000 in January 2025 and to provide certain inventory to Restore, in exchange for Restore agreeing to assume the operations and certain liabilities of the Company’s U.S.-based outlet store business. As of June 28, 2025, the Company had transferred the remaining inventory to Restore and no further obligations exist. The remaining inventory was previously reflected in the “Inventories” line and the offsetting valuation allowance was previously reflected in the “Valuation allowance - U.S.-based outlet store business” line in the “Assets and liabilities of the discontinued operations of the global Champion, U.S.-based outlet store and Champion Japan businesses” table below. The agreement with Restore did not include Champion-branded U.S. retail stores, which were addressed in accordance with the purchase agreement governing the sale of the global Champion business to Authentic.
Upon meeting the criteria for held-for-sale classification in the second quarter of 2024, which qualified as a triggering event, the Company performed an impairment analysis of the goodwill associated with the Company’s U.S.-based outlet store business, which resulted in a non-cash impairment charge of $2,500 51,071
The operations of the U.S.-based outlet store business were reported in Other in Note “Business Segment Information” prior to its reclassification to discontinued operations.
Champion Japan Business
The sale of the intellectual property and certain operating assets of the global Champion business, which occurred in the fourth quarter of 2024, excluded the Champion Japan business. In December 2024, the Company finalized plans to exit the Champion Japan business and expects to complete the sale of the business within the current fiscal year. The Company determined that the exit of the Champion Japan business represented a component of the single strategic plan that included the global Champion and U.S.-based outlet store businesses, which met held-for-sale and discontinued operations accounting criteria in 2024. Accordingly, the Company began to separately report the results of Champion Japan business as discontinued operations in its Condensed Consolidated Statements of Operations and to present the related assets and liabilities as held for sale in its Condensed Consolidated Balance Sheets in the fourth quarter of 2024. These changes have been applied to all periods presented. The Company will continue to operate the Champion Japan business as a licensee of Authentic pursuant to the terms of a license agreement entered into at the Initial Closing until the sale of the Champion Japan business is completed. The operations of the Champion Japan business were previously reported in the International segment.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Financial Results of Discontinued Operations
The operating results of discontinued operations only reflect revenues and expenses that are directly attributable to the global Champion, U.S.-based outlet store and Champion Japan businesses (the “Discontinued Operations”) that have been eliminated from continuing operations. Discontinued operations does not include any allocation of corporate overhead expense. The Company did not allocate interest expense to discontinued operations in the quarter ended June 28, 2025 and allocated interest expense to discontinued operations of approximately $17,605 in the quarter ended June 29, 2024. The Company allocated interest expense to discontinued operations of approximately $223 and $35,662 in the six months ended June 28, 2025 and June 29, 2024, respectively, resulting from the requirement to pay down a portion of the Company’s outstanding term debt under the Senior Secured Credit Facility with the net proceeds from the sale of the global Champion business. Interest expense was allocated to the global Champion business on a pro-rata basis for the expected amount of debt required to be repaid under the Senior Secured Credit Facility, compared to the total outstanding term debt subject to the repayment requirement. There was no interest allocated to the discontinued operations of the U.S.-based outlet store business or the Champion Japan business. The key components of the operating results of the Discontinued Operations are as follows:
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Impairment of goodwill | |||||||||||||||||||||||
| Loss on sale of businesses and classification of assets held for sale | |||||||||||||||||||||||
| Operating loss | ( | ( | ( | ( | |||||||||||||||||||
| Other expenses | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Loss from discontinued operations before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Income tax (benefit) expense | ( | ||||||||||||||||||||||
| Loss from discontinued operations, net of tax | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Assets and liabilities of discontinued operations of the global Champion, U.S.-based outlet store and Champion Japan businesses classified as held for sale in the Condensed Consolidated Balance Sheets as of June 28, 2025, December 28, 2024 and June 29, 2024 consist of the following:
| June 28, 2025 | December 28, 2024 | June 29, 2024 | |||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Trade accounts receivable, net | |||||||||||||||||
| Inventories | |||||||||||||||||
| Other current assets | |||||||||||||||||
Valuation allowance - Global Champion Business Deferred Closing | ( | ||||||||||||||||
| Valuation allowance - U.S.-based outlet store business | ( | ( | |||||||||||||||
| Current assets held for sale - discontinued operations | |||||||||||||||||
| Property, net | |||||||||||||||||
| Right-of-use assets | |||||||||||||||||
| Trademarks and other identifiable intangibles, net | — | ||||||||||||||||
| Goodwill | |||||||||||||||||
| Deferred tax assets | |||||||||||||||||
| Other noncurrent assets | |||||||||||||||||
| Noncurrent assets held for sale - discontinued operations | |||||||||||||||||
| Total assets of discontinued operations | $ | $ | $ | ||||||||||||||
| Accounts payable | $ | $ | $ | ||||||||||||||
| Accrued liabilities | |||||||||||||||||
| Lease liabilities | |||||||||||||||||
| Current liabilities held for sale - discontinued operations | |||||||||||||||||
| Lease liabilities - noncurrent | |||||||||||||||||
| Pension and postretirement benefits | |||||||||||||||||
| Other noncurrent liabilities | |||||||||||||||||
| Noncurrent liabilities held for sale - discontinued operations | |||||||||||||||||
| Total liabilities of discontinued operations | $ | $ | $ | ||||||||||||||
The cash flows related to the discontinued operations have not been segregated and are included in the Condensed Consolidated Statements of Cash Flows. The following table presents cash flow and non-cash information for the Discontinued Operations:
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Depreciation | $ | $ | $ | $ | |||||||||||||||||||
| Amortization | $ | $ | $ | $ | |||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
| Impairment of goodwill | $ | $ | $ | $ | |||||||||||||||||||
| Inventory write-down charges | $ | $ | $ | $ | |||||||||||||||||||
| Loss on sale of businesses and classification of assets held for sale | $ | $ | $ | $ | |||||||||||||||||||
| Capital expenditures included in accounts payable at end of period | $ | $ | $ | $ | |||||||||||||||||||
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(4) Revenue Recognition
The following table presents the Company’s revenues disaggregated by the customer’s method of purchase:
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Wholesale | $ | $ | $ | $ | |||||||||||||||||||
| Owned retail stores and websites | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total net sales | $ | $ | $ | $ | |||||||||||||||||||
Revenue Sources
Wholesale Revenue
Wholesale revenue is primarily generated by sales of the Company’s products to retailers to support their brick-and-mortar operations and e-commerce platforms. Wholesale revenue also includes royalty revenue from license agreements which the Company earns through license agreements with manufacturers of other consumer products that incorporate certain of the Company’s brands. The Company accrues revenue earned under these contracts based upon reported sales from the licensees.
Owned Retail Stores and Website Revenue
Owned brick-and-mortar retail stores and website revenue is generated through sales driven directly by the consumer through company-operated stores and e-commerce platforms.
Other Revenue
(5) Stockholders’ Equity
Basic earnings (loss) per share was computed by dividing net income (loss) by the number of weighted average shares of common stock outstanding during the period. Diluted earnings (loss) per share was calculated to give effect to all potentially issuable dilutive shares of common stock using the treasury stock method. In the quarter and six months ended June 29, 2024, all potentially dilutive securities were excluded from the diluted weighted average share calculation because the Company incurred a net loss for the quarter and six months ended and their inclusion would be anti-dilutive.
The weighted average number of shares used in the basic and diluted earnings (loss) per share calculation is as follows:
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Basic weighted average shares outstanding | |||||||||||||||||||||||
| Effect of potentially dilutive securities: | |||||||||||||||||||||||
| Restricted stock units | |||||||||||||||||||||||
| Employee stock purchase plan and other | |||||||||||||||||||||||
| Diluted weighted average shares outstanding | |||||||||||||||||||||||
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
The following securities were excluded from the diluted weighted average share calculation because their effect would be anti-dilutive:
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Stock options | |||||||||||||||||||||||
| Restricted stock units | |||||||||||||||||||||||
| Employee stock purchase plan and other | |||||||||||||||||||||||
(6) Inventories
Inventories consisted of the following:
| June 28, 2025 | December 28, 2024 | June 29, 2024 | |||||||||||||||
| Raw materials | $ | $ | $ | ||||||||||||||
| Work in process | |||||||||||||||||
| Finished goods | |||||||||||||||||
| $ | $ | $ | |||||||||||||||
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(7) Accounts Receivable and Supplier Finance Programs
Sales of Trade Accounts Receivable
The Company has entered into agreements to sell selected trade accounts receivable to financial institutions based on programs sponsored by the Company as well as working capital programs offered by certain of the Company’s customers. As a result of the strong creditworthiness of these customers, the discount taken on most of these programs is less than the marginal borrowing rate on the Company’s variable rate credit facilities. In all agreements, after the sale, the Company does not retain any beneficial interests in the receivables. The applicable financial institution services and collects the accounts receivable directly from the customer for programs offered by the Company’s customers. For programs sponsored by the Company, the Company maintains continued involvement as the servicer to collect the accounts receivable from the customer and remit payment to the financial institutions. Net proceeds of these accounts receivable sale programs are recognized in the Condensed Consolidated Statements of Cash Flows as part of operating cash flows.
The Company sold total trade accounts receivable related to Company sponsored programs of $476,909 and $506,699 during the quarters ended June 28, 2025 and June 29, 2024, respectively, and $830,941 and $867,013 during the six months ended June 28, 2025 and June 29, 2024, respectively, and removed the trade accounts receivable from the Company’s Condensed Consolidated Balance Sheets at the time of sale. As of June 28, 2025, December 28, 2024 and June 29, 2024, $477,007 , $383,878 and $461,896 , respectively, of the sold trade accounts receivable remain outstanding with the financial institutions as a result of the related servicing obligation. Collections of accounts receivable not yet submitted to the financial institutions are remitted within one week of collection and recognized within the “Accounts payable” line of the Condensed Consolidated Balance Sheets. As these funds are related to the ongoing service agreement and do not serve in a financing capacity, cash flows collected from customers and submitted to the financial institutions are recognized in the Condensed Consolidated Statements of Cash Flows as part of operating cash flows.
The Company recognized total funding fees of $6,296 and $7,629 during the quarters ended June 28, 2025 and June 29, 2024, respectively, and $11,066 and $13,714 during the six months ended June 28, 2025 and June 29, 2024, respectively, for sales of trade accounts receivable to financial institutions and working capital programs in the “Other expenses” line in the Condensed Consolidated Statements of Operations.
Supplier Finance Program Obligations
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(8) Debt
Debt consisted of the following:
| Interest Rate as of June 28, 2025 | Principal Amount | Maturity Date | |||||||||||||||||||||
| June 28, 2025 | December 28, 2024 | ||||||||||||||||||||||
| Senior Secured Credit Facility: | |||||||||||||||||||||||
| Revolving Loan Facility | $ | $ | March 2030 | ||||||||||||||||||||
| Term Loan A | March 2030 | ||||||||||||||||||||||
| Term Loan B | March 2032 | ||||||||||||||||||||||
| 9.000% Senior Notes | February 2031 | ||||||||||||||||||||||
| 4.875% Senior Notes | - | ||||||||||||||||||||||
| Accounts Receivable Securitization Facility | May 2026 | ||||||||||||||||||||||
| Less long-term debt issuance costs and debt discount | |||||||||||||||||||||||
| Less current maturities | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
As of June 28, 2025 the Company’s primary financing arrangements were the Senior Secured Credit Facility, the 9.000% senior notes (the “9.000% Senior Notes”) and the accounts receivable securitization facility (the “ARS Facility”). The outstanding balances at June 28, 2025 and December 28, 2024 are reported in the “Accounts Receivable Securitization Facility”, “Current portion of long-term debt” and “Long-term debt” lines in the Condensed Consolidated Balance Sheets.
Debt Refinancing and Amendments
In March 2025, the Company refinanced its debt structure to provide greater financial flexibility to invest in the Company’s growth strategy while focusing free cash flow on reducing debt. The refinancing of its Senior Secured Credit Facility provides for a $750,000 senior secured revolving credit facility maturing March 7, 2030 (the “Revolving Loan Facility”), a $400,000 senior secured term loan A facility maturing March 7, 2030 (the “Term Loan A Facility”), and a $1,100,000 senior secured term loan B facility maturing March 7, 2032 (the “Term Loan B Facility”).
The net proceeds from the Term Loan A Facility and the Term Loan B Facility, together with cash on hand, were used to redeem the Company’s outstanding 4.875% Senior Notes due 2026 in the original aggregate principal amount of $900,000 , to refinance the Company’s existing senior secured credit facilities, and to pay related fees and expenses. The proceeds of the Revolving Loan Facility will be used for general corporate purposes and working capital needs.
In March 2025, the redemption of the 4.875% Senior Notes required payment of a make-whole premium of $1,394 and the Company incurred non-cash charges of $7,669 for the write-off of unamortized debt issuance costs related to the refinancing of the Senior Secured Credit Facility. Additionally, the Company incurred fees of $19,500 related to the refinancing of the Senior Secured Credit Facility, of which $812 was charged to expense and $18,688 was capitalized as debt issuance costs. The Company also capitalized a debt discount of $2,750 related to the Term Loan B Facility. The capitalized debt issuance costs and debt discount will be amortized into interest expense over the respective terms of the debt instruments. The make-whole premium payment, debt issuance costs write-off and fees charged to expense resulted in charges of $9,875 in 2025, which is reported in the “Other expenses” line in the Condensed Consolidated Statements of Operations. The cash payments for the make-whole premium and fees capitalized as debt issuance costs are reported in “Net cash from financing activities” in the Condensed Consolidated Statements of Cash Flows. The cash payments for third party and legal fees charged to expense are reported in “Net cash from operating activities” in the Condensed Consolidated Statements of Cash Flows.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
The issue price of the Term Loan B Facility is equal to 99.75 % of the aggregate principal. Borrowings under the Term Loan B Facility will bear interest based on the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin of 2.75 %. Borrowings under the Revolving Loan Facility and the Term Loan A Facility will bear interest based on SOFR or the “base rate,” in each case, plus an applicable margin. The applicable margin for the Revolving Loan Facility and the Term Loan A Facility will initially be 2.00 % in the case of SOFR-based loans and 1.00 % in the case of base rate loans. Thereafter, such applicable margin is determined by reference to a pricing grid set forth in the Credit Agreement based on the Company’s Consolidated Net Total Leverage Ratio, ranging from a maximum of 2.00 % in the case of SOFR-based loans and 1.00 % in the case of base rate loans to a minimum of 1.25 % in the case of SOFR-based loans and 0.25 % in the case of base rate loans. In addition, the unused portion of the Revolving Credit Facility will be subject to a commitment fee, also determined by reference to the pricing grid, and ranging from a maximum of 0.30 % to a minimum of 0.175 %, based upon the Company’s then applicable Consolidated Net Total Leverage Ratio. Under the Revolving Loan Facility, up to $112.5 million of availability may be drawn in the form of letters of credit and up to $37.5 million of availability may be drawn in the form of swing line loans.
The Credit Agreement contains financial covenants testing the Company’s leverage ratio and interest coverage ratio. The leverage ratio financial covenant requires that the Company maintain a leverage ratio of no greater than 5.00 4.50 :1.00 for each quarter thereafter; provided that, at the Company’s option, such leverage ratio may be increased to 4.75 :1.00 for any period of up to four consecutive fiscal quarters following certain acquisitions, subject to certain conditions. The minimum interest coverage ratio financial covenant requires that the Company maintain an interest coverage ratio of no less than 2.00 2.25 :1.00 for each quarter thereafter. The financial covenants are tested with respect to the Revolving Loan Facility and the Term Loan A Facility, but not the Term Loan B Facility.
The Credit Agreement contains representations, covenants and events of default that are customary for financing transactions of this nature. Events of default in the Credit Agreement include, among others: (a) the failure to pay when due the obligations owing thereunder, (b) the failure to perform (and not timely remedy, if applicable) certain covenants; (c) certain defaults and accelerations under other indebtedness; (d) the occurrence of bankruptcy or insolvency events; (e) certain judgments against the Company or any of its restricted subsidiaries; (f) any representation, warranty or statement made thereunder or under the ancillary loan documents and certain certificates being subsequently proven to be untrue in any material respect and such inaccuracy is adverse to the lenders; and (g) the occurrence of a Change of Control (as defined in the Credit Agreement). Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the Credit Agreement and the ancillary loan documents.
Other Debt Related Activity
As of June 28, 2025, the Company had $529,814 of borrowing availability under the $750,000 Revolving Loan Facility after taking into account $3,186 of standby and trade letters of credit issued and outstanding under this facility.
The ARS Facility, which was entered into in November 2007, was amended in May 2025 which extended the maturity date to May 2026 and reduced the 2025 quarterly fluctuating facility limit to $85,000 in the first and second quarters and $115,000 in the third and fourth quarters only to the extent that the face value of the receivables in the collateral pool, net of applicable concentrations, reserves and other deductions, exceeds the outstanding loans. Additionally, the amendment created three pricing tiers based on a consolidated total net leverage ratio. As of June 28, 2025, the quarterly fluctuating facility limit was $85,000 , the maximum borrowing capacity was $85,000 , and the Company had $9,000 of borrowing availability under the ARS Facility.
The Company had $953 of borrowing capacity under other international credit facilities after taking into account outstanding borrowings at June 28, 2025. The Company had $9,315 of international letters of credit outstanding at June 28, 2025. Available liquidity for other international credit facilities is reduced for any outstanding international letters of credit. The international letters of credit are not outstanding under any specific credit facility and do not reduce actual borrowing capacity under the specific credit facilities.
In 2024, the Company paid down $1,127,483 of its outstanding term debt under the Senior Secured Credit Facility, of which $1,083,233 was a result of accelerated debt payments using a combination of cash generated from operations and net sale proceeds from the Initial Closing of the sale of the global Champion business. See Note “Assets and Liabilities of Businesses Held for Sale” for additional information.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(9) Income Taxes
In the quarter ended June 28, 2025, income tax expense was $12,606 resulting in an effective income tax rate of 12.9 % and in the quarter ended June 29, 2024, income tax expense was $11,485 resulting in an effective income tax rate of (9.3 )%. In the six months ended June 28, 2025, income tax expense was $17,777 resulting in an effective income tax rate of 15.1 % and in the six months ended June 29, 2024, income tax expense was $20,056 resulting in an effective income tax rate of (13.5 )%. The Company's effective tax rates for the quarter and six months ended June 28, 2025 and June 29, 2024 primarily differ from the U.S. statutory rate due to valuation allowances against certain net deferred tax assets. Additionally, the Company had unfavorable discrete items of $2,832 and $1,274 for the quarter and six months ended June 28, 2025, respectively and had favorable discrete items of $1,629 and $1,622 for the quarter and six months ended June 29, 2024, respectively.
The Organization for Economic Co-operation and Development (the “OECD”), an international association of 38 countries including the U.S., has proposed changes to numerous long-standing tax principles, including a global minimum tax initiative. On December 12, 2022, the European Union member states agreed to implement the OECD’s Pillar 2 global corporate minimum tax rate of 15% on companies with revenues of at least $790,000, which went into effect in 2024. While there is uncertainty whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which the Company operates have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. The Company does not expect Pillar 2 to have a material impact on its effective tax rate or its consolidated results of operations, financial position and cash flows for 2025. The Company is continuing to monitor the developing laws of Pillar 2 and its potential impact on future periods.
As of June 28, 2025, a valuation allowance of approximately $346,550 was recorded against U.S. deferred tax assets. A valuation allowance release indicates that it is more likely than not that the deferred tax assets will be realized. The need for this valuation allowance is continuously evaluated and based on the Company’s assessment of current and anticipated future earnings, there is a reasonable possibility that the Company will have sufficient taxable income to release all, or a significant portion, of this valuation allowance within the next 12 months. A release of this valuation allowance would result in the recognition of certain deferred tax assets and a reduction in income tax expense for the period in which the release occurs. However, the exact timing and amount of the valuation allowance release is subject to the level of profitability that the Company can achieve.
Subsequent to the end of the quarter, on July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA” or “the Bill”) into law. The Bill includes significant updates to federal tax law that may impact the Company. However, ASC 740 mandates that effects of changes in tax law be considered in the period in which the legislation is enacted into law. Consequently, the OBBBA has no
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(10) Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss (“AOCI”) are as follows:
| Cumulative Translation Adjustment | Cash Flow Hedges | Defined Benefit Plans | Income Taxes | Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||
| Balance at March 29, 2025 | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ||||||||||||||||||||||||||||
| Current-period other comprehensive income (loss) activity | ( | ( | |||||||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||
| Balance at June 28, 2025 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Cumulative Translation Adjustment | Cash Flow Hedges | Defined Benefit Plans | Income Taxes | Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||
| Balance at December 28, 2024 | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ||||||||||||||||||||||||||||
Current-period other comprehensive income (loss) activity | ( | ( | |||||||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||
| Balance at June 28, 2025 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Cumulative Translation Adjustment(1) | Cash Flow Hedges | Defined Benefit Plans | Income Taxes | Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||
| Balance at March 30, 2024 | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ||||||||||||||||||||||||||||
| Current-period other comprehensive income activity | |||||||||||||||||||||||||||||
| Total other comprehensive income | |||||||||||||||||||||||||||||
| Balance at June 29, 2024 | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
Cumulative Translation Adjustment(1) | Cash Flow Hedges | Defined Benefit Plans | Income Taxes | Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||
| Balance at December 30, 2023 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ||||||||||||||||||||||||||||
Current-period other comprehensive income (loss) activity | ( | ( | ( | ||||||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||||||||
| Balance at June 29, 2024 | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
(1)Cumulative Translation Adjustment includes translation adjustments and net investment hedges. See Note “Financial Instruments and Risk Management” for additional disclosures about net investment hedges.
The Company had the following reclassifications out of AOCI:
| Component of AOCI | Location of Reclassification from AOCI | Amount of Reclassification from AOCI into Net Income (Loss) | ||||||||||||||||||||||||||||||
| Quarters Ended | Six Months Ended | |||||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||||||||||||
| Gain on forward foreign exchange contracts designated as cash flow hedges | Cost of sales | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Income tax | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Loss from discontinued operations, net of tax | ||||||||||||||||||||||||||||||||
| Net of tax | ||||||||||||||||||||||||||||||||
| Gain (loss) on interest rate contracts designated as cash flow hedges | Interest expense, net | ( | ( | |||||||||||||||||||||||||||||
| Income tax | ||||||||||||||||||||||||||||||||
| Net of tax | ( | ( | ||||||||||||||||||||||||||||||
| Amortization of deferred actuarial loss and prior service cost and settlement cost | Other expenses | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Income tax | ( | ( | ||||||||||||||||||||||||||||||
| Net of tax | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Total reclassifications | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||
22
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(11) Financial Instruments and Risk Management
The Company uses forward foreign exchange contracts and has used cross-currency swap contracts to manage its exposures to movements in foreign exchange rates primarily related to the Australian dollar, Canadian dollar, and Mexican peso and uses interest rate contracts to manage its exposures to movements in interest rates.
| Hedge Type | June 28, 2025 | December 28, 2024 | |||||||||||||||
| U.S. dollar equivalent notional amount of derivative instruments: | |||||||||||||||||
| Forward foreign exchange contracts | Cash Flow and Mark to Market | $ | $ | ||||||||||||||
| Interest rate contracts | Cash Flow | $ | $ | ||||||||||||||
Fair Values of Derivative Instruments
The fair values of derivative instruments related to forward foreign exchange contracts and interest rate contracts recognized in the Condensed Consolidated Balance Sheets of the Company were as follows:
| Balance Sheet Location | Fair Value | ||||||||||||||||
| June 28, 2025 | December 28, 2024 | ||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||
| Forward foreign exchange contracts | Other current assets | $ | $ | ||||||||||||||
| Interest rate contracts | Other current assets | ||||||||||||||||
| Forward foreign exchange contracts | Other noncurrent assets | ||||||||||||||||
| Interest rate contracts | Other noncurrent assets | ||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||
| Forward foreign exchange contracts | Other current assets | ||||||||||||||||
| Total derivative assets | |||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||
| Forward foreign exchange contracts | Accrued liabilities | ( | ( | ||||||||||||||
| Forward foreign exchange contracts | Other noncurrent liabilities | ( | |||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||
| Forward foreign exchange contracts | Accrued liabilities | ( | ( | ||||||||||||||
| Total derivative liabilities | ( | ( | |||||||||||||||
| Net derivative asset (liability) | $ | ( | $ | ||||||||||||||
Cash Flow Hedges
The Company uses forward foreign exchange contracts and has used cross-currency swap contracts to reduce the effect of fluctuating foreign currencies on foreign currency-denominated transactions, foreign currency-denominated investments and other known foreign currency exposures. Gains and losses on these contracts are intended to offset losses and gains on the hedged transaction in an effort to reduce the earnings volatility resulting from fluctuating foreign currency exchange rates. The Company also uses interest rate contracts to reduce the effect of the variability in future interest payments on variable-rate debt to lock in certainty of future cash flows.
In March 2023, the Company entered into an interest rate contract with a total notional amount of $900,000 , which amortized down to $600,000 on March 31, 2025. The Company designated this interest rate contract, which matures on March 31, 2026, to hedge the variability in contractually specified interest rates above 50 basis points associated with future interest payments on a portion of the Company’s variable-rate term loans to lock in certainty of future cash flows. In October 2024, in connection with the pay down of term debt related to the Initial Closing of the sale of the global Champion business, the Company terminated the interest rate contract, which had a remaining loss in AOCI of $4,155 on the termination date that will be amortized into earnings through the original contract maturity date of March 31, 2026. In April 2025, the Company entered into two interest rate swap contacts with a total notional amount of $200,000 , which will mature on April 2027. The Company designated these contracts to hedge the variability associated with future interest payment on a portion of the Company’s
23
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
variable-rate debts, which is over and above the $600,000 from unhedged interest rate contract until its original termination date of March 2026, to lock in certainty of future cash flows.
The Company expects to reclassify into earnings during the next 12 months a net loss from AOCI of approximately $1,245 . The Company is hedging exposure to the variability in future foreign currency-denominated cash flows for forecasted transactions over the next 17 months and the variability in future interest payments on debt over the next 21 months. The Company also expects the amortization of AOCI related to the interest rate contract over the next 9 months.
The effect of derivative instruments designated as cash flow hedges on the Condensed Consolidated Statements of Operations and AOCI is as follows:
| Amount of Gain (Loss) Recognized in AOCI on Derivative Instruments | |||||||||||||||||||||||
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Forward foreign exchange contracts | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||
| Interest rate contracts | |||||||||||||||||||||||
| Total | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Location of Gain (Loss) Reclassified from AOCI | Amount of Gain (Loss) Reclassified from AOCI into Net Income (Loss) | ||||||||||||||||||||||||||||
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||||||||
Forward foreign exchange contracts(1) | Cost of sales | $ | $ | $ | $ | ||||||||||||||||||||||||
Forward foreign exchange contracts(1) | Loss from discontinued operations, net of tax | ||||||||||||||||||||||||||||
| Interest rate contracts | Interest expense, net | ( | ( | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||
(1)The Company does not exclude amounts from effectiveness testing for cash flow hedges that would require recognition into earnings based on changes in fair value.
The following table presents the amounts in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded:
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Cost of sales | $ | $ | $ | $ | |||||||||||||||||||
| Selling, general and administrative expenses | $ | $ | $ | $ | |||||||||||||||||||
| Interest expense, net | $ | $ | $ | $ | |||||||||||||||||||
| Loss from discontinued operations, net of tax | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Net Investment Hedges
In July 2019, the Company entered into two pay-fixed rate, receive-fixed rate cross-currency swap contracts with a total notional amount of €300,000 that were designated as hedges of a portion of the beginning balance of the Company’s net investment in its European subsidiaries. These cross-currency swap contracts, which had an original maturity date of May 15, 2024, swapped U.S. dollar-denominated interest payments for Euro-denominated interest payments, thereby economically converting a portion of the Company’s fixed-rate 4.625 % Senior Notes to a fixed-rate 2.3215 % Euro-denominated obligation.
24
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
In July 2019, the Company also designated the full amount of its 3.5% Senior Notes with a carrying value of €500,000 , which was a nonderivative financial instrument, as a hedge of a portion of the beginning balance of the Company’s European net investment. As of April 1, 2021, the Company reduced the amount of its 3.5% Senior Notes designated in the European net investment hedge from €500,000 to €200,000 . In February 2023, in connection with the redemption of the 3.5% Senior Notes, the Company de-designated the remainder of the 3.5% Senior Notes in the European net investment hedge and unwound these cross-currency swap contracts. Upon settlement, there was a cumulative gain of $5,525 from the designated portion of the 3.5% Senior Notes and a cumulative gain of $19,001 from the cross-currency swap contracts that has remained in cumulative translation adjustment, a component of AOCI. Both have been released into earnings at the completion of the Initial Closing of the global Champion business in the fourth quarter of 2024. The Company had no
Mark to Market Hedges
Derivatives used in mark to market hedges are not designated as hedges under the accounting standards. The Company uses forward foreign exchange derivative contracts as hedges against the impact of foreign exchange fluctuations on existing accounts receivable and payable balances and intercompany lending transactions denominated in foreign currencies. Forward foreign exchange derivative contracts are recorded as mark to market hedges when the hedged item is a recorded asset or liability that is revalued in each accounting period. Any gains or losses resulting from changes in fair value are recognized directly into earnings. Gains or losses on these contracts largely offset the net remeasurement gains or losses on the related assets and liabilities.
The effect of derivative instruments not designated as hedges on the Condensed Consolidated Statements of Operations is as follows:
| Location of Gain (Loss) | Amount of Gain (Loss) Recognized in Net Income (Loss) | ||||||||||||||||||||||||||||
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||||||||
| Forward foreign exchange contracts | Cost of sales | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||
| Forward foreign exchange contracts | Loss from discontinued operations, net of tax | ||||||||||||||||||||||||||||
| Total | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||
(12) Fair Value of Assets and Liabilities
As of June 28, 2025 and December 28, 2024, the Company held certain financial assets and liabilities that are required to be measured at fair value on a recurring basis. These consisted of the Company’s derivative instruments related to forward foreign exchange derivative contracts and deferred compensation plan liabilities. The fair values of forward foreign exchange derivative contracts are determined using the cash flows of the forward contracts, discount rates to account for the passage of time and current foreign exchange market data which are all based on inputs readily available in public markets and are categorized as Level 2. The fair value of deferred compensation plan liabilities is based on readily available current market data and is categorized as Level 2. The Company’s defined benefit pension plan investments are not required to be measured at fair value or disclosed on a quarterly recurring basis.
There were no changes during the quarter and six months ended June 28, 2025 to the Company’s valuation techniques used to measure asset and liability fair values on a recurring basis. As of and during the quarter and six months ended June 28, 2025, the Company did not have any non-financial assets or liabilities that were required to be measured at fair value on a recurring basis or non-recurring basis.
25
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
The following tables set forth by level within the fair value hierarchy of the Company’s financial assets and liabilities accounted for at fair value on a recurring basis.
| Assets (Liabilities) at Fair Value as of June 28, 2025 | |||||||||||||||||||||||
| Total | Quoted Prices In Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
| Forward foreign exchange contracts - assets | $ | $ | $ | $ | |||||||||||||||||||
| Interest rate contracts - assets | |||||||||||||||||||||||
| Forward foreign exchange contracts - liabilities | ( | ( | |||||||||||||||||||||
| Total derivative contracts | ( | ( | |||||||||||||||||||||
| Deferred compensation plan liability | ( | ( | |||||||||||||||||||||
| Total | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Assets (Liabilities) at Fair Value as of December 28, 2024 | |||||||||||||||||||||||
| Total | Quoted Prices In Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
| Forward foreign exchange contracts - assets | $ | $ | $ | $ | |||||||||||||||||||
| Forward foreign exchange contracts - liabilities | ( | ( | |||||||||||||||||||||
| Total derivative contracts | |||||||||||||||||||||||
| Deferred compensation plan liability | ( | ( | |||||||||||||||||||||
| Total | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, trade accounts receivable and accounts payable approximated fair value as of June 28, 2025 and December 28, 2024. The carrying amount of trade accounts receivable included allowance for doubtful accounts, chargebacks and other deductions of $21,696 and $21,120 as of June 28, 2025 and December 28, 2024, respectively. The fair value of debt, which is classified as a Level 2 liability, was $2,429,811 and $2,326,202 as of June 28, 2025 and December 28, 2024, respectively. Debt had a carrying value of $2,393,000 and $2,298,267 as of June 28, 2025 and December 28, 2024, respectively. The fair values were estimated using quoted market prices as provided in secondary markets, which consider the Company’s credit risk and market related conditions.
(13) Business Segment Information
The Company regularly monitors its reportable segments to determine if changes in facts and circumstances would indicate whether changes in the determination or aggregation of operating segments are necessary. In the second quarter of 2024, the Company announced that it reached an agreement to sell the global Champion business as discussed in Note “Assets and Liabilities of Businesses Held for Sale” and as a result, this business was reclassified as held for sale and reflected as discontinued operations for all periods presented. While the global Champion business was reflected within all reportable segments prior to its reclassification to discontinued operations, the U.S. Champion business made up the majority of the Company’s former Activewear segment. Accordingly, the former Activewear segment has been eliminated and the segment information herein excludes the results of the global Champion business for all periods presented. As a result of the strategic shift and resulting reorganization, the chief executive officer, who is the Company’s chief operating decision maker, began reviewing all U.S. innerwear and U.S. activewear operations together as one U.S. operating segment and the Company’s operations are now managed and reported in two operating segments, each of which is a reportable segment for financial reporting purposes: U.S. and International. In December 2024, the Champion Japan business, which was previously reported within the International segment, was classified as held for sale and reflected as discontinued operations for all periods presented. Accordingly, the Champion Japan business has been excluded from the International segment information herein. These changes have been applied to all periods presented. These segments are organized and managed principally by
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Table of Contents
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
geographic location. Each segment has its own management team that is responsible for the operations of the segment’s businesses, but the segments share a common supply chain and media and marketing platforms.
Other consists of the Company’s sales related to short-term transition service agreements and support of disposed businesses. The Company’s U.S.-based outlet store business was also reflected in Other prior to its reclassification to discontinued operations in the second quarter of 2024 as discussed in Note “Assets and Liabilities of Businesses Held for Sale”. As a result of this reclassification, the results of the U.S.-based outlet store business are excluded from the segment information herein for all periods presented.
The types of products and services from which each reportable segment derives its revenues are as follows:
•U.S. primarily includes innerwear sales in the United States of basic branded apparel products that are replenishment in nature under the product categories of men’s underwear, women’s panties, children’s underwear and socks, and intimate apparel, which includes bras and shapewear. This segment also includes other apparel sales in the United States of branded products that are primarily seasonal in nature to both retailers and wholesalers.
•International primarily includes sales of the Company’s innerwear and other apparel products outside the United States, primarily in Australia, Latin America, Asia and Canada.
The Company evaluates the operating performance of its segments based upon segment operating profit, which is defined as operating profit before general corporate expenses, restructuring and other action-related charges and amortization of intangibles. The accounting policies of the segments are consistent with those described in Note “Summary of Significant Accounting Policies” to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 28, 2024.
| Quarter Ended | ||||||||||||||||||||
| June 28, 2025 | ||||||||||||||||||||
| U.S. | International | Total | ||||||||||||||||||
| Segment net sales | $ | $ | $ | |||||||||||||||||
| Reconciliation of net sales: | ||||||||||||||||||||
| Other net sales | ||||||||||||||||||||
| Total net sales | ||||||||||||||||||||
Less(1): | ||||||||||||||||||||
| Media, advertising and promotion | ||||||||||||||||||||
| Distribution | ||||||||||||||||||||
Other segment costs(2) | ||||||||||||||||||||
| Total segment operating profit | ||||||||||||||||||||
| Reconciliation of operating profit (loss): | ||||||||||||||||||||
| Other profit | ||||||||||||||||||||
| General corporate expenses | ( | |||||||||||||||||||
| Restructuring and other action-related charges | ||||||||||||||||||||
| Amortization of intangibles | ( | |||||||||||||||||||
| Total operating profit (loss) | ||||||||||||||||||||
| Other expenses | ( | |||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | $ | |||||||||||||||||||
(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.
(2) Other segment costs include cost of sales, marketing, selling and other administrative expenses.
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Table of Contents
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
| Quarter Ended | ||||||||||||||||||||
| June 29, 2024 | ||||||||||||||||||||
| U.S. | International | Total | ||||||||||||||||||
| Segment net sales | $ | $ | $ | |||||||||||||||||
| Reconciliation of net sales: | ||||||||||||||||||||
| Other net sales | ||||||||||||||||||||
| Total net sales | ||||||||||||||||||||
Less(1): | ||||||||||||||||||||
| Media, advertising and promotion | ||||||||||||||||||||
| Distribution | ||||||||||||||||||||
Other segment costs(2) | ||||||||||||||||||||
| Total segment operating profit | ||||||||||||||||||||
| Reconciliation of operating profit (loss): | ||||||||||||||||||||
| Other loss | ( | |||||||||||||||||||
| General corporate expenses | ( | |||||||||||||||||||
| Restructuring and other action-related charges | ( | |||||||||||||||||||
| Amortization of intangibles | ( | |||||||||||||||||||
| Total operating profit (loss) | ( | |||||||||||||||||||
| Other expenses | ( | |||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | $ | ( | ||||||||||||||||||
(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.
(2) Other segment costs include cost of sales, marketing, selling and other administrative expenses.
| Six Months Ended | ||||||||||||||||||||
| June 28, 2025 | ||||||||||||||||||||
| U.S. | International | Total | ||||||||||||||||||
| Segment net sales | $ | $ | $ | |||||||||||||||||
| Reconciliation of net sales: | ||||||||||||||||||||
| Other net sales | ||||||||||||||||||||
| Total net sales | ||||||||||||||||||||
Less(1): | ||||||||||||||||||||
| Media, advertising and promotion | ||||||||||||||||||||
| Distribution | ||||||||||||||||||||
Other segment costs(2) | ||||||||||||||||||||
| Total segment operating profit | ||||||||||||||||||||
| Reconciliation of operating profit (loss): | ||||||||||||||||||||
| Other profit | ||||||||||||||||||||
| General corporate expenses | ( | |||||||||||||||||||
| Restructuring and other action-related charges | ||||||||||||||||||||
| Amortization of intangibles | ( | |||||||||||||||||||
| Total operating profit (loss) | ||||||||||||||||||||
| Other expenses | ( | |||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | $ | |||||||||||||||||||
(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.
(2) Other segment costs include cost of sales, marketing, selling and other administrative expenses.
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Table of Contents
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
| Six Months Ended | ||||||||||||||||||||
| June 29, 2024 | ||||||||||||||||||||
| U.S. | International | Total | ||||||||||||||||||
| Segment net sales | $ | $ | $ | |||||||||||||||||
| Reconciliation of net sales: | ||||||||||||||||||||
| Other net sales | ||||||||||||||||||||
| Total net sales | ||||||||||||||||||||
Less(1): | ||||||||||||||||||||
| Media, advertising and promotion | ||||||||||||||||||||
| Distribution | ||||||||||||||||||||
Other segment costs(2) | ||||||||||||||||||||
| Total segment operating profit | ||||||||||||||||||||
| Reconciliation of operating profit (loss): | ||||||||||||||||||||
| Other profit | ||||||||||||||||||||
| General corporate expenses | ( | |||||||||||||||||||
| Restructuring and other action-related charges | ( | |||||||||||||||||||
| Amortization of intangibles | ( | |||||||||||||||||||
| Total operating profit (loss) | ( | |||||||||||||||||||
| Other expenses | ( | |||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | $ | ( | ||||||||||||||||||
(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.
(2) Other segment costs include cost of sales, marketing, selling and other administrative expenses.
The Company incurred restructuring and other action-related charges that were reported in the following lines in the Condensed Consolidated Statements of Operations:
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Cost of sales | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Total included in operating profit (loss) | ( | ( | |||||||||||||||||||||
| Other expenses | |||||||||||||||||||||||
| Total included in income (loss) from continuing operations before income taxes | ( | ||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Total restructuring and other action-related charges included in income (loss) from continuing operations | $ | ( | $ | $ | $ | ||||||||||||||||||
29
Table of Contents
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
The components of restructuring and other action-related charges were as follows:
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Restructuring and other action-related charges: | |||||||||||||||||||||||
| Professional services | $ | $ | $ | $ | |||||||||||||||||||
| Headcount actions and related severance | ( | ( | |||||||||||||||||||||
| Supply chain restructuring and consolidation | ( | ( | |||||||||||||||||||||
| Corporate asset impairment charges | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total included in operating profit (loss) | ( | ( | |||||||||||||||||||||
| Loss on extinguishment of debt included in other expenses | |||||||||||||||||||||||
| Total included in income (loss) from continuing operations before income taxes | ( | ||||||||||||||||||||||
| Tax effect on actions | |||||||||||||||||||||||
| Total included in income tax expense | |||||||||||||||||||||||
| Total restructuring and other action-related charges included in income (loss) from continuing operations | $ | ( | $ | $ | $ | ||||||||||||||||||
As a result of and related to the sale of the global Champion business and the completed exit of the U.S.-based outlet store business, the Company began implementing significant restructuring and consolidation efforts in the second quarter of 2024 within its supply chain network, both manufacturing and distribution, as well as corporate cost and headcount reductions to align the Company’s network and improve its overall cost structure within continuing operations to drive stronger operating performance and margin expansion.
Restructuring and other action-related charges and adjustments within operating profit were $(1,191 ) and $189,034 in the quarters ended June 28, 2025 and June 29, 2024, respectively, and $(82 ) and $204,003 in the six months ended June 28, 2025 and June 29, 2024, respectively, as described in more detail below.
•Charges related to professional services primarily include consulting and advisory services related to restructuring activities including the Company’s cost transformation and technology modernization initiatives, which are reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statements of Operations.
•The Company recognized headcount actions and related severance charges, including subsequent adjustments to initial estimates, resulting from restructuring activities and operating model initiatives are primarily reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statements of Operations.
•Supply chain restructuring and consolidation charges primarily attributed to charges and subsequent adjustments to estimates related to headcount actions and related severance pertaining to restructuring and consolidation efforts within the Company’s supply chain network as well as charges for accelerated amortization of right of use assets for the leased facilities that the Company expects to exit before the end of the contractual lease term and depreciation of certain fixed assets.
•Corporate asset impairment charges primarily represent charges during the second quarter of 2024 related to a contract termination of $10,395 and impairment of the Company’s headquarters location that was classified as held for sale of $9,712 which were recorded in the “Cost of sales” and “Selling, general and administrative expenses” lines of the Condensed Consolidated Statements of Operations, respectively.
•The remaining restructuring and other action-related charges within operating profit are primarily associated with charges related to real estate initiatives pertaining to the Company’s corporate headquarters move and other restructuring and action-related charges.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
In the six months ended June 28, 2025, the Company recorded charges totaling $9,979 in restructuring and other action-related charges related to the refinancing of the senior secured credit facility and redemption of its 4.875% Senior Notes. The charges, which are recorded in the “Other expenses” line in the Condensed Consolidated Statements of Operations, included a payment of $1,394 for a required make-whole premium related to the redemption of the 4.875% Senior Notes, charges for third party and legal fees of $686 related to the senior secured credit facility refinancing, and non-cash charges of $7,669 for the write-off of the related unamortized debt issuance costs. See Note “Debt” for additional information.
At December 28, 2024, the Company had an accrual of $42,175 for expected benefit payments related to actions taken in prior years. During the six months ended June 28, 2025, the Company approved headcount actions of $330 which were recorded in the “Selling, general and administrative expenses” line, in the Condensed Consolidated Statements of Operations and included in the “Headcount actions and related severance” line in the restructuring and other action-related charges table above. During the six months ended June 28, 2025, the Company made benefit payments and other adjustments of $20,664 , resulting in an ending accrual of $21,841 which is included in the “Accrued liabilities” line of the Condensed Consolidated Balance Sheets at June 28, 2025.
The following table presents segment asset information as of June 28, 2025, December 28, 2024, and June 29, 2024:
| June 28, 2025 | December 28, 2024 | June 29, 2024 | |||||||||||||||
| Assets - Inventories: | |||||||||||||||||
| U.S. | $ | $ | $ | ||||||||||||||
| International | |||||||||||||||||
The following table presents segment depreciation and amortization expense information for the quarters and six months ended June 28, 2025 and June 29, 2024:
| Quarters Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Depreciation and amortization expense: | |||||||||||||||||||||||
| U.S. | $ | $ | $ | $ | |||||||||||||||||||
| International | |||||||||||||||||||||||
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||
This management’s discussion and analysis of financial condition and results of operations, or MD&A, contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” in this Quarterly Report on Form 10-Q for a discussion of the uncertainties, risks and assumptions associated with these statements. This discussion should be read in conjunction with our historical financial statements and related notes thereto and the other disclosures contained elsewhere in this Quarterly Report on Form 10-Q. The unaudited condensed consolidated interim financial statements and notes included herein should be read in conjunction with our audited consolidated financial statements and notes for the year ended December 28, 2024, which were included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for the full year or any other future periods, and our actual results may differ materially from those expressed in or implied by the forward-looking statements as a result of various factors, including but not limited to those listed under Part I, Item 1A. “Risk Factors” and included elsewhere in our Annual Report on Form 10-K for the year ended December 28, 2024. In particular, among others, statements with respect to trends associated with our business, our key business strategies, our expectations regarding liquidity and our ability to maintain compliance with the covenants in our Senior Secured Credit Facility (as defined below) and our future financial performance included in this MD&A are forward-looking statements.
Overview
Hanesbrands Inc. (collectively with its subsidiaries, “we,” “us,” “our,” or the “Company”) is a socially responsible global leader in everyday iconic apparel with a mission to create a more comfortable world for every body. We operate across the Americas, Australia and Asia. We own a portfolio of some of the world’s most recognized apparel brands in the core basic and innerwear apparel categories, including Hanes, Bonds, Bali, Maidenform, Playtex, Bras N Things, Berlei, Wonderbra, Zorba, JMS/Just My Size and Comfortwash. We design, manufacture, source and sell a broad range of innerwear apparel, such as T-shirts, bras, panties, shapewear, underwear and socks, as well as other apparel products that are manufactured or sourced in our low-cost global supply chain. Our products are broadly distributed and available to consumers where, when and how they want to shop, including in mass merchants, mid-tier and department stores, specialty stores, company-owned retail stores as well as both retailer and company-owned e-commerce websites. Our portfolio of leading brands is designed to address the needs and wants of various consumer segments across a broad range of basic apparel products and our brands have strong consumer positioning that helps distinguish them from competitors.
Our Key Business Strategies
Our business strategy integrates our brand superiority, industry-leading innovation and low-cost global supply chain to provide higher value products while lowering production costs. We operate primarily in the global innerwear apparel category, along with smaller operations within other apparel categories. Our strategy is based on managing and growing our iconic brands through the three key principles of Simplify for Growth, Focus for Impact, and Continuously Improving to Win. By simplifying the portfolio, we continue to elevate these brands by delivering quality and value to our consumers through innovative brand and product experiences. We remain focused on the core product offerings while also expanding through innovation and new business opportunities for greater marketplace impact.
We are taking decisive actions to streamline operations and deliver measurable results and have pushed to reduce inventory and product SKUs through our disciplined inventory management. We have segmented and consolidated our world-class supply chain for greater efficiency and flexibility and our go-to-market strategy has been reimagined into a winning, repeatable cadence, supported by a robust, consumer-led innovation process that keeps us at the forefront of industry trends. We are highly confident our iconic brand portfolio, world-class supply chain and product innovation will ensure we will consistently grow sales, expand our margins and generate cash flow.
Over the last several years, we have experienced several unanticipated challenges, including significant cost inflation, market disruption and consumer-demand headwinds. Despite the challenging global operating environment, we have been able to balance the near-term management of the business with making the long-term investments necessary to execute our strategy and transform the Company. During this time, we have made meaningful progress on several of our strategic initiatives. We have pivoted our U.S. innerwear business back to gaining market share, which has been driven by the launch of new product innovation, increased marketing investments in our brands and improved on-shelf product availability. We have simplified our portfolio by selling our European Innerwear and U.S. Sheer Hosiery businesses.
In 2024, we reached the decision to exit the global Champion business, U.S.-based outlet store business and the Champion Japan business. We determined these businesses represent multiple components of a single strategic plan that met held-for-sale and discontinued operations accounting criteria in 2024. Accordingly, we began to separately report the results of these businesses as discontinued operations in our Condensed Consolidated Statements of Operations and to present the related assets and liabilities as held for sale in our Condensed Consolidated Balance Sheets. These changes have been applied to all periods
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presented. Unless otherwise noted, discussion within this MD&A relates to continuing operations. See Note, “Assets and Liabilities of Businesses Held for Sale” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information about discontinued operations.
We seek to generate strong cash flow through effectively optimizing our capital structure and managing working capital levels. In January 2023, we shifted our capital allocation strategy to focus the use of all our free cash flow (cash from operations less capital expenditures) on reducing debt and bringing our leverage back to a range that is no greater than two to three times on a net debt-to-adjusted EBITDA basis. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, excluding restructuring and other action-related costs and certain other losses, charges and expenses. Net debt is defined as the total of current debt, long-term debt, and borrowings under the accounts receivable securitization facility (excluding long-term debt issuance costs) less other debt and cash adjustments and cash and cash equivalents.
Our Segments
In 2024 we realigned our segment reporting as a result of the sale of the global Champion business, as discussed in Note “Assets and Liabilities of Businesses Held for Sale” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q. While the global Champion business was reflected within all reportable segments prior to its reclassification to discontinued operations, the U.S. Champion business made up the majority of our former Activewear segment. Accordingly, the former Activewear segment has been eliminated and the segment information herein excludes the results of the global Champion business for all periods presented. As a result of the strategic shift and resulting reorganization, the chief executive officer, who is our chief operating decision maker, began reviewing all U.S. innerwear and U.S. activewear operations together as one U.S. operating segment. As a result of these changes, our operations are now managed and reported in two operating segments, each of which is a reportable segment for financial reporting purposes: U.S. and International. In December 2024, the Champion Japan business, which was previously reported within the International segment, was classified as held for sale and reflected as discontinued operations for all periods presented. Accordingly, the Champion Japan business has been excluded from the International segment information herein. These changes have been applied to all periods presented. These segments are organized and managed principally by geographic location. Each segment has its own management team that is responsible for the operations of the segment’s businesses, but the segments share a common supply chain and media and marketing platforms.
Other consists of short-term transition service agreements and support of disposed businesses. Our U.S.-based outlet store business was also reflected in Other prior to its reclassification to discontinued operations in the second quarter of 2024 as discussed in Note “Assets and Liabilities of Businesses Held for Sale” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q. As a result of this reclassification, the results of the U.S.-based outlet store business are excluded from the segment information herein for all periods presented.
Goodwill and Indefinite-lived Intangible Assets
Goodwill and indefinite-lived intangible assets are evaluated for impairment at least annually as of the first day of the third quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or intangible asset below its carrying value. In the quarter ended June 28, 2025, we identified a triggering event within one of our indefinite-lived trademarks within the Australian business. As a result, we performed a quantitative assessment utilizing an income approach to estimate the fair value of the indefinite-lived trademark. The most significant assumptions used to estimate the fair value of the indefinite-lived trademark include the weighted average cost of capital, revenue growth rate, terminal growth rate and operating profit margin.
While our analysis indicated a meaningful decline in the fair value cushion above the carrying value, it was determined that no impairment existed for the indefinite-lived trademark as of the quarter ended June 28, 2025. The decline in this trademark was driven by continued macroeconomic pressures impacting consumer spending in Australia and resulted in a fair value that approximated the carrying value at the time the analysis was performed. As a result, this trademark is considered to be at a high risk for future impairment if economic conditions worsen or earnings and operating cash flows do not recover as currently estimated by management. As of June 28, 2025, the carrying value of this trademark was $227,968, which is reflected in the “Trademarks and other identifiable intangibles, net” line in the Condensed Consolidated Balance Sheets.
Global Economy
The global macroeconomic pressures continue to impact our business operations and financial results, as described in more detail under “Condensed Consolidated Results of Operations - Second Quarter Ended June 28, 2025 Compared with Second Quarter Ended June 29, 2024” and “Condensed Consolidated Results of Operations - Six Months Ended June 28, 2025 Compared with Six Months Ended June 29, 2024” below, primarily through consumer-demand headwinds and elevated interest rates. Despite the challenging global operating environment, we have been able to balance near term management of the business with implementing changes to execute our strategy to simplify and position the Company for growth.
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In April 2025, the U.S. imposed a new tariff and trade policy and has subsequently announced various updates to its tariff policy. The imposition of tariffs by the U.S. government and some trading partners, along with associated geopolitical tensions have created an uncertain environment for global trade. While we believe we are well positioned to navigate the current U.S. tariffs, countries may, in the future, adjust or impose new tariffs or other restrictions which may further affect our business and operations or could lead to further weakened business conditions for our industry. With continued uncertainty surrounding the geopolitical and trade environment, we continue to evaluate the impact of actual and proposed tariffs and other trade controls on our business and plan and implement actions to mitigate unfavorable impacts from tariffs and related risks. Such actions may include, among others, further cost reductions, pricing actions and pursuing incremental revenue opportunities created from tariff-related market disruptions.
The future impact of global macroeconomic pressures, including consumer demand headwinds, elevated interest rates and the imposition of tariffs and other trade controls remains highly uncertain, and our business and results of operations, including our net sales, earnings and cash flows, could be adversely impacted. See the related risk factors under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 28, 2024.
Seasonality and Other Factors
Our operating results are typically subject to some variability due to seasonality and other factors. For instance, we have historically generated higher sales during the back-to-school and holiday shopping seasons and during periods of cooler weather, which benefits certain product categories such as socks and fleece. Our diverse range of product offerings, however, typically mitigates some of the impact of seasonal changes in demand for certain items. Sales levels in any period are also impacted by our customers’ decisions to increase or decrease their inventory levels of our categories in response to anticipated consumer demand or the overall inventory levels of their other product categories. Our customers may cancel orders, change delivery schedules or change the mix of products ordered with minimal notice to us. Media, advertising and promotion expenses may vary from period to period during a fiscal year depending on the timing of our advertising campaigns for retail selling seasons and product introductions.
Although the majority of our products are replenishment in nature and tend to be purchased by consumers on a planned rather than impulse basis, our sales are impacted by discretionary consumer spending trends. Discretionary spending is affected by many factors that are outside of our control, including, among others, general business conditions, interest rates, inflation, consumer debt levels, the availability of consumer credit, currency exchange rates, tariffs, taxation, energy prices, unemployment trends and other matters that influence consumer confidence and spending. Consumers’ purchases of discretionary items, including our products, could decline during periods when disposable income is lower, when prices increase in response to rising costs, or in periods of actual or perceived unfavorable economic conditions. As a result, consumers may choose to purchase fewer of our products, to purchase lower-priced products of our competitors in response to higher prices for our products or may choose not to purchase our products at prices that reflect our price increases that become effective from time to time.
Inflation can have a long-term impact on us because increasing costs of materials and labor may impact our ability to maintain satisfactory margins. For example, the cost of the materials that are used in our manufacturing process, such as oil-related commodity prices and other raw materials, including cotton, dyes and chemicals, and other costs, such as fuel, energy and utility costs, can fluctuate as a result of inflation and other factors. Disruptions to the global supply chain due to factory closures, port congestion, transportation delays as well as labor and container shortages may negatively impact product availability, revenue growth and gross margins. We would work to mitigate the impact of global supply chain disruptions through a combination of cost savings and operating efficiencies, as well as pricing actions, which could have an adverse impact on demand. Costs incurred for materials and labor are capitalized into inventory and impact our results as the finished goods inventory is sold. In addition, a significant portion of our products are manufactured in countries other than the United States and declines in the value of the U.S. dollar may result in higher manufacturing costs. Increases in inflation may not be matched by growth in consumer income, which also could have a negative impact on spending.
Changes in product sales mix can impact our gross profit as the percentage of our sales attributable to higher margin products, such as intimate apparel and men’s underwear, and lower margin products, such as basic apparel, fluctuate from time to time. In addition, sales attributable to higher and lower margin products within the same product category fluctuate from time to time. Our customers may change the mix of products ordered with minimal notice to us, which makes trends in product sales mix difficult to predict. However, certain changes in product sales mix are seasonal in nature, as sales of socks and fleece products generally have higher sales during the last two quarters (July to December) of each fiscal year as a result of cooler weather, back-to-school shopping and holidays, while other changes in product mix may be attributable to consumers’ preferences and discretionary spending.
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Key Financial Results from the Second Quarter Ended June 28, 2025
Key financial results are as follows:
•Total net sales in the second quarter of 2025 were $991 million, compared with $974 million in the same period of 2024, representing a 2% increase.
•Operating profit (loss) increased 345% to $155 million in the second quarter of 2025, compared with $(63) million in the same period of 2024. As a percentage of sales, operating profit (loss) increased to 15.6% in the second quarter of 2025, compared to (6.5)% in the same period of 2024.
•Diluted earnings per share from continuing operations was $0.24 in the second quarter of 2025 compared with diluted loss per share of $(0.39) in the same period of 2024.
Condensed Consolidated Results of Operations — Second Quarter Ended June 28, 2025 Compared with Second Quarter Ended June 29, 2024
| Quarters Ended | |||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | Higher (Lower) | Percent Change | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Net sales | $ | 991,325 | $ | 973,927 | $ | 17,398 | 1.8 | % | |||||||||||||||
| Cost of sales | 579,400 | 675,584 | (96,184) | (14.2) | |||||||||||||||||||
| Gross profit | 411,925 | 298,343 | 113,582 | 38.1 | |||||||||||||||||||
| Selling, general and administrative expenses | 257,267 | 361,546 | (104,279) | (28.8) | |||||||||||||||||||
| Operating profit (loss) | 154,658 | (63,203) | 217,861 | 344.7 | |||||||||||||||||||
| Other expenses | 9,023 | 10,616 | (1,593) | (15.0) | |||||||||||||||||||
| Interest expense, net | 47,536 | 50,279 | (2,743) | (5.5) | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | 98,099 | (124,098) | 222,197 | 179.0 | |||||||||||||||||||
| Income tax expense | 12,606 | 11,485 | 1,121 | 9.8 | |||||||||||||||||||
| Income (loss) from continuing operations | 85,493 | (135,583) | 221,076 | 163.1 | |||||||||||||||||||
| Loss from discontinued operations, net of tax | (3,882) | (162,797) | 158,915 | 97.6 | |||||||||||||||||||
| Net income (loss) | $ | 81,611 | $ | (298,380) | $ | 379,991 | 127.4 | % | |||||||||||||||
Net Sales
Net sales increased 2% during the second quarter of 2025 compared to the second quarter of 2024 primarily due to sales related to short-term transition service agreements and support of disposed businesses in the second quarter of 2025, partially offset by the continued macro-driven slowdown impacting consumer spending and the unfavorable impact from foreign currency exchange rates in our International business of approximately $7 million.
Operating Profit (Loss)
Operating profit (loss) as a percentage of net sales was 15.6% during the second quarter of 2025, representing an increase from (6.5)% in the second quarter of 2024. The operating margin improvement primarily resulted from approximately 95 basis points from cost savings initiatives within our supply chain, approximately 75 basis points from cost savings and disciplined expense management, approximately 50 basis points from lower input costs and approximately 35 basis points from decreased advertising expense. Additionally, a decrease in restructuring and other action-related charges included in operating profit to $(1) million in the second quarter of 2025 compared to $189 million in the second quarter of 2024, resulted in a favorable impact to operating margin of approximately 1,955 basis points.
Other Highlights
Other Expenses – Other expenses decreased $2 million in the second quarter of 2025 compared to the second quarter of 2024 primarily due to lower funding fees for sales of accounts receivable to financial institutions and lower pension expense in the second quarter of 2025.
Interest Expense – Interest expense from continuing operations was $48 million and $50 million in the second quarters of 2025 and 2024, respectively, representing a decrease of nearly $3 million. Interest expense from continuing operations in the second quarter of 2024 excludes $18 million, which was allocated to discontinued operations due to the requirement to pay down a portion of our outstanding term debt under the Senior Secured Credit Facility with the net proceeds from the sale of the global Champion business. Combined interest expense from continuing and discontinued operations decreased approximately
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$18 million in the second quarter of 2025 compared to the second quarter of 2024 primarily due to lower weighted average outstanding debt balances combined with a lower weighted average interest rate on our borrowings during the second quarter of 2025. Our combined weighted average interest rate, including the portion of interest expense that was allocated to discontinued operations, on our outstanding debt was 7.34% for the second quarter of 2025 compared to 7.51% for the second quarter of 2024.
Income Tax Expense – In the second quarter of 2025, income tax expense was $13 million, resulting in an effective income tax rate of 12.9% and in the second quarter of 2024, income tax expense was $11 million, resulting in an effective income tax rate of (9.3)%. Our effective tax rates for the second quarters of 2025 and 2024 primarily differ from the U.S. statutory rate due to valuation allowances against certain net deferred tax assets. Additionally, we had unfavorable discrete items of $3 million in the second quarter of 2025 and favorable discrete items of $2 million in the second quarter of 2024.
As of June 28, 2025, a valuation allowance of approximately $347 million was recorded against U.S. deferred tax assets. A valuation allowance release indicates that it is more likely than not that the deferred tax assets will be realized. The need for this valuation allowance is continuously evaluated and based on our assessment of current and anticipated future earnings, there is a reasonable possibility that we will have sufficient taxable income to release all, or a significant portion, of this valuation allowance within the next 12 months. A release of this valuation allowance would result in the recognition of certain deferred tax assets and a reduction in income tax expense for the period in which the release occurs. However, the exact timing and amount of the valuation allowance release is subject to the level of profitability that we can achieve.
Subsequent to the end of the quarter, on July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA” or “the Bill”) into law. The Bill includes significant updates to federal tax law that may impact the Company. However, ASC 740 mandates that effects of changes in tax law be considered in the period in which the legislation is enacted into law. Consequently, the OBBBA has no impact on our income taxes for the quarter ended June 28, 2025. We are currently evaluating the Bill and its potential impact on future periods.
Discontinued Operations – The results of our discontinued operations include the operations of our global Champion, U.S.-based outlet store business and the Champion Japan business, which we reached the decision to exit in 2024. See Note “Assets and Liabilities of Businesses Held for Sale” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information related to discontinued operations.
Operating Results by Business Segment — Second Quarter Ended June 28, 2025 Compared with Second Quarter Ended June 29, 2024
| Net Sales | |||||||||||||||||||||||
| Quarters Ended | |||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | Higher (Lower) | Percent Change | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| U.S. | $ | 735,483 | $ | 740,154 | $ | (4,671) | (0.6) | % | |||||||||||||||
| International | 225,953 | 233,073 | (7,120) | (3.1) | |||||||||||||||||||
| Other | 29,889 | 700 | 29,189 | 4,169.9 | |||||||||||||||||||
| Total | $ | 991,325 | $ | 973,927 | $ | 17,398 | 1.8 | % | |||||||||||||||
| Operating Profit and Margin | |||||||||||||||||||||||||||||||||||
| Quarters Ended | |||||||||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | Higher (Lower) | Percent Change | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||
| U.S. | $ | 183,628 | 25.0 | % | $ | 158,214 | 21.4 | % | $ | 25,414 | 16.1 | % | |||||||||||||||||||||||
| International | 24,253 | 10.7 | 30,237 | 13.0 | (5,984) | (19.8) | |||||||||||||||||||||||||||||
| Other | 4,388 | 14.7 | (130) | (18.6) | 4,518 | 3,475.4 | |||||||||||||||||||||||||||||
| Corporate | (57,611) | NM | (251,524) | NM | 193,913 | 77.1 | |||||||||||||||||||||||||||||
| Total | $ | 154,658 | 15.6 | % | $ | (63,203) | (6.5) | % | $ | 217,861 | 344.7 | % | |||||||||||||||||||||||
U.S.
U.S. net sales decreased less than 1% compared to the second quarter of 2024 primarily due to softer point-of-sale trends, stemming from the continued macroeconomic pressures in the U.S., primarily within our intimate apparel business, partially offset by growth in our basics and active apparel and new businesses including scrubs and loungewear products.
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U.S. operating margin was 25.0%, an increase from 21.4% in the second quarter of 2024. The operating margin rate improvement primarily resulted from approximately 140 basis points from cost savings initiatives within our supply chain, approximately 110 basis points from lower input costs, and approximately 85 basis points from favorable assortment management and mix.
International
Net sales in the International segment decreased 3% compared to the second quarter of 2024 due to unfavorable foreign currency exchange rates. The unfavorable impact of foreign currency exchange rates decreased net sales by approximately $7 million in the second quarter of 2025. International net sales on a constant currency basis, defined as net sales excluding the impact of foreign currency, were consistent when compared to the second quarter of 2024. The impact of foreign currency exchange rates is calculated by applying prior period exchange rates to the current year financial results. We believe constant-currency information is useful to management and investors to facilitate comparison of operating results and better identify trends in our businesses.
International operating margin was 10.7%, a decrease from 13.0% in the second quarter of 2024. The operating margin rate decline primarily resulted from approximately 80 basis points from higher operating expenses, approximately 55 basis points from strategic, planned brand investments, and approximately 65 basis points from unfavorable mix.
Other
Sales and operating results in the second quarter of 2025 primarily reflect short-term transition service agreements and support of disposed businesses. Sales and operating results in the second quarter of 2024 primarily reflect the U.S. Sheer Hosiery business support which was sold on September 29, 2023.
Corporate
Corporate expenses included in operating profit were lower in the second quarter of 2025 compared to the second quarter of 2024 primarily due to lower restructuring and other action-related charges.
Restructuring and other action-related charges within operating profit were $(1) million and $189 million in the second quarters of 2025 and 2024, respectively, as described in more detail below.
•Charges related to professional services primarily include consulting and advisory services related to restructuring activities including cost transformation and technology modernization initiatives, which are reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statements of Operations.
•The Company recognized headcount actions and related severance charges, including subsequent adjustments to initial estimates, resulting from restructuring activities and operating model initiatives are primarily reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statements of Operations.
•Supply chain restructuring and consolidation charges primarily attributed to charges and subsequent adjustments to estimates related to headcount actions and related severance pertaining to restructuring and consolidation efforts within the Company’s supply chain network as well as charges for accelerated amortization of right of use assets for the leased facilities that the Company expects to exit before the end of the contractual lease term.
•Corporate asset impairment charges primarily represent charges during the second quarter of 2024 related to a contract termination of $10,395 and impairment of the Company’s headquarters location that was classified as held for sale of $9,712 which were recorded in the “Cost of sales” and “Selling, general and administrative expenses” lines of the Condensed Consolidated Statements of Operations, respectively.
•The remaining restructuring and other action-related charges within operating profit are primarily associated with charges related to real estate initiatives pertaining to our corporate headquarters move and other restructuring and action-related charges.
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The components of restructuring and other action-related charges were as follows:
| Quarters Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| Restructuring and other action-related charges: | |||||||||||
| Professional services | $ | 2,909 | $ | 3,762 | |||||||
| Headcount actions and related severance | (1,028) | 6,911 | |||||||||
| Supply chain restructuring and consolidation | (3,184) | 156,807 | |||||||||
| Corporate asset impairment charges | — | 20,107 | |||||||||
| Other | 112 | 1,447 | |||||||||
| Total included in operating profit (loss) | (1,191) | 189,034 | |||||||||
| Total included in income (loss) from continuing operations before income taxes | (1,191) | 189,034 | |||||||||
| Tax effect on actions | — | — | |||||||||
| Total included in income tax expense | — | — | |||||||||
| Total restructuring and other action-related charges included in income (loss) from continuing operations | $ | (1,191) | $ | 189,034 | |||||||
Condensed Consolidated Results of Operations — Six Months Ended June 28, 2025 Compared with Six Months Ended June 29, 2024
| Six Months Ended | |||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | Higher (Lower) | Percent Change | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Net sales | $ | 1,751,473 | $ | 1,718,602 | $ | 32,871 | 1.9 | % | |||||||||||||||
| Cost of sales | 1,022,848 | 1,122,826 | (99,978) | (8.9) | |||||||||||||||||||
| Gross profit | 728,625 | 595,776 | 132,849 | 22.3 | |||||||||||||||||||
| Selling, general and administrative expenses | 494,059 | 623,565 | (129,506) | (20.8) | |||||||||||||||||||
| Operating profit (loss) | 234,566 | (27,789) | 262,355 | 944.1 | |||||||||||||||||||
| Other expenses | 26,295 | 19,678 | 6,617 | 33.6 | |||||||||||||||||||
| Interest expense, net | 90,855 | 100,862 | (10,007) | (9.9) | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | 117,416 | (148,329) | 265,745 | 179.2 | |||||||||||||||||||
| Income tax expense | 17,777 | 20,056 | (2,279) | (11.4) | |||||||||||||||||||
| Income (loss) from continuing operations | 99,639 | (168,385) | 268,024 | 159.2 | |||||||||||||||||||
| Loss from discontinued operations, net of tax | (27,484) | (169,117) | 141,633 | 83.7 | |||||||||||||||||||
| Net income (loss) | $ | 72,155 | $ | (337,502) | $ | 409,657 | 121.4 | % | |||||||||||||||
Net Sales
Net sales increased 2% during the first six months of 2025 compared to the first six months of 2024 primarily due to sales related to short-term transition service agreements and support of disposed businesses during the first six months of 2025, partially offset the unfavorable impact from foreign currency exchange rates in our International business of approximately $19 million and the continued macro-driven slowdown impacting consumer spending across segments.
Operating Profit (Loss)
Operating profit (loss) as a percentage of net sales was 13.4% during the first six months of 2025, representing a increase from (1.6)% in the first six months of 2024. The operating margin improvement primarily resulted from approximately 160 basis points from cost savings and disciplined expense management, approximately 120 basis points from cost savings initiatives within our supply chain, and approximately 100 basis points from lower input costs. Additionally, a decrease in restructuring and other action-related charges included in operating profit (loss) of $204 million in the first six months of 2025 compared to the first six months of 2024, resulted in a favorable impact to operating margin of approximately 1,190 basis points.
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Other Highlights
Other Expenses – Other expenses increased $7 million in the first six months of 2025 compared to the first six months of 2024 primarily due to charges of approximately $10 million as a result of the redemption of the 4.875% Senior Notes and refinancing of the Senior Secured Credit Facility in first quarter of 2025. The charges included a payment of $1 million for a required make-whole premium related to the redemption of the 4.875% Senior Notes, third party and legal fees charged to expense of $1 million related to the Senior Secured Credit Facility refinancing, and non-cash charges of $8 million for the write-off of the related unamortized debt issuance costs. See Note “Debt” to our condensed consolidated interim financial statements included in our Quarterly Report on Form 10-Q for additional information. Other expenses also included lower pension expense and lower funding fees for sales of accounts receivable to financial institutions in the second quarter of 2025.
Interest Expense – Interest expense from continuing operations was $91 million and $101 million in the first six months of 2025 and 2024, respectively, representing a decrease of $10 million. The interest expense from continuing operations excludes $0.2 million and $36 million in the first six months of 2025 and 2024, respectively, which was allocated to discontinued operations due to the requirement to pay down a portion of outstanding term debt under the Senior Secured Credit Facility with the net proceeds from the sale of the global Champion business. Combined interest expense from continuing and discontinued operations decreased $41 million in the first six months of 2025 compared to the first six months of 2024 primarily due to lower weighted average outstanding debt balance combined with a lower weighted average interest rate on our borrowings during the first six months of 2025. Our combined weighted average interest rate, including the portion of interest expense that was allocated to discontinued operations, on our outstanding debt was 7.05% for the first six months of 2025 compared to 7.59% for the first six months of 2024.
Income Tax Expense – In the first six months of 2025, income tax expense was $18 million, resulting in an effective income tax rate of 15.1% and in the first six months of 2024, income tax expense was $20 million, resulting in an effective income tax rate of (13.5)%. Our effective tax rates for the first six months of 2025 and the first six months of 2024 primarily differ from the U.S. statutory rate due to valuation allowances against certain net deferred tax assets. Additionally, we had unfavorable discrete items of $1 million in the first six months of 2025 and favorable discrete items of $2 million in the first six months of 2024.
As of June 28, 2025, a valuation allowance of approximately $347 million was recorded against U.S. deferred tax assets. A valuation allowance release indicates that it is more likely than not that the deferred tax assets will be realized. The need for this valuation allowance is continuously evaluated and based on our assessment of current and anticipated future earnings, there is a reasonable possibility that we will have sufficient taxable income to release all, or a significant portion, of this valuation allowance within the next 12 months. A release of this valuation allowance would result in the recognition of certain deferred tax assets and a reduction in income tax expense for the period in which the release occurs. However, the exact timing and amount of the valuation allowance release is subject to the level of profitability that we can achieve.
Subsequent to the end of the quarter, on July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA” or “the Bill”) into law. The Bill includes significant updates to federal tax law that may impact the Company. However, ASC 740 mandates that effects of changes in tax law be considered in the period in which the legislation is enacted into law. Consequently, the OBBBA has no impact on our income taxes for the six months ended June 28, 2025. We are currently evaluating the Bill and its potential impact on future periods.
Discontinued Operations – The results of our discontinued operations include the operations of our global Champion and U.S.-based outlet store businesses which we reached the decision to exit in the second quarter of 2024 as a result of our announcement that we reached an agreement to sell the global Champion business to Authentic. See Note “Assets and Liabilities of Businesses Held for Sale” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information related to discontinued operations.
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Operating Results by Business Segment — Six Months Ended June 28, 2025 Compared with Six Months Ended June 29, 2024
| Net Sales | |||||||||||||||||||||||
| Six Months Ended | |||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | Higher (Lower) | Percent Change | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| U.S. | $ | 1,271,708 | $ | 1,284,045 | $ | (12,337) | (1.0) | % | |||||||||||||||
| International | 421,492 | 433,084 | (11,592) | (2.7) | |||||||||||||||||||
| Other | 58,273 | 1,473 | 56,800 | 3,856.1 | |||||||||||||||||||
| Total | $ | 1,751,473 | $ | 1,718,602 | $ | 32,871 | 1.9 | % | |||||||||||||||
| Operating Profit and Margin | |||||||||||||||||||||||||||||||||||
| Six Months Ended | |||||||||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | Higher (Lower) | Percent Change | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||
| U.S. | $ | 295,797 | 23.3 | % | $ | 256,477 | 20.0 | % | $ | 39,320 | 15.3 | % | |||||||||||||||||||||||
| International | 46,746 | 11.1 | 47,038 | 10.9 | (292) | (0.6) | |||||||||||||||||||||||||||||
| Other | 6,817 | 11.7 | 551 | 37.4 | 6,266 | 1,137.2 | |||||||||||||||||||||||||||||
| Corporate | (114,794) | NM | (331,855) | NM | 217,061 | 65.4 | |||||||||||||||||||||||||||||
| Total | $ | 234,566 | 13.4 | % | $ | (27,789) | (1.6) | % | $ | 262,355 | 944.1 | % | |||||||||||||||||||||||
U.S.
U.S. net sales decreased 1% compared to the first six months of 2024 primarily due to softer point-of-sale trends stemming from the continued macroeconomic pressures and higher than anticipated level of inventory management actions by select retailers.
U.S. operating margin was 23.3%, an increase from 20.0% in the first six months of 2024. The operating margin improvement primarily resulted from approximately 180 basis points from cost savings initiatives within our supply chain, approximately 125 basis points from lower input costs and approximately 40 basis points from favorable assortment management and mix.
International
Net sales in the International segment decreased 3% compared to the first six months of 2024 due to unfavorable foreign currency exchange rates which was partially offset by growth in Australia. The unfavorable impact of foreign currency exchange rates decreased net sales approximately $19 million in the first six months of 2025. International net sales on a constant currency basis, defined as net sales excluding the impact of foreign currency, increased by approximately 2% when compared to the first six months of 2024. The impact of foreign currency exchange rates is calculated by applying prior period exchange rates to the current year financial results. We believe constant-currency information is useful to management and investors to facilitate comparison of operating results and better identify trends in our businesses.
International operating margin was 11.1%, an increase from 10.9% in the first six months of 2024. The operating margin improvement primarily resulted from approximately 65 basis points from favorable mix and approximately 60 basis points from cost savings and disciplined expense management which was partially offset by approximately 70 basis points from increased strategic, planned brand investments.
Other
Sales and operating results in the first six months of 2025 primarily reflect short-term transition service agreements and support of disposed businesses. Sales and operating results in the first six months of 2024 primarily reflect the U.S. Sheer Hosiery business support which was sold on September 29, 2023.
Corporate
Corporate expenses included in operating profit were lower in the first six months of 2025 compared to the first six months of 2024 primarily due to lower restructuring and other action-related charges.
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Restructuring and other action-related charges within operating profit were $(0.1) million and $204 million in the first six months of 2025 and 2024, respectively, as described in more detail below.
•Charges related to professional services primarily include consulting and advisory services related to restructuring activities including cost transformation and technology modernization initiatives, which are reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statements of Operations.
•The Company recognized headcount actions and related severance charges, including subsequent adjustments to initial estimates, resulting from restructuring activities and operating model initiatives are primarily reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statements of Operations.
•Supply chain restructuring and consolidation charges primarily attributed to charges and subsequent adjustments to estimates related to headcount actions and related severance pertaining to restructuring and consolidation efforts within the Company’s supply chain network as well as charges for accelerated amortization of right of use assets for the leased facilities that the Company expects to exit before the end of the contractual lease term and depreciation of certain fixed assets.
•Corporate asset impairment charges primarily represent charges during the second quarter of 2024 related to a contract termination of $10,395 and impairment of the Company’s headquarters location that was classified as held for sale of $9,712 which were recorded in the “Cost of sales” and “Selling, general and administrative expenses” lines of the Condensed Consolidated Statements of Operations, respectively.
•The remaining restructuring and other action-related charges within operating profit are primarily associated with charges related to real estate initiatives pertaining to our corporate headquarters move and other restructuring and action-related charges.
The components of restructuring and other action-related charges were as follows:
| Six Months Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| Restructuring and other action-related charges: | |||||||||||
| Professional services | $ | 3,366 | $ | 4,433 | |||||||
| Headcount actions and related severance | (819) | 19,098 | |||||||||
| Supply chain restructuring and consolidation | (3,244) | 158,914 | |||||||||
| Corporate asset impairment charges | — | 20,107 | |||||||||
| Other | 615 | 1,451 | |||||||||
| Total included in operating profit (loss) | (82) | 204,003 | |||||||||
| Loss on extinguishment of debt included in other expenses | 9,979 | — | |||||||||
| Total included in income (loss) from continuing operations before income taxes | 9,897 | 204,003 | |||||||||
| Tax effect on actions | — | — | |||||||||
| Total included in income tax expense | — | — | |||||||||
| Total restructuring and other action-related charges included in income (loss) from continuing operations | $ | 9,897 | $ | 204,003 | |||||||
Liquidity and Capital Resources
Cash Requirements and Trends and Uncertainties Affecting Liquidity
We primarily rely on our cash flows generated from operations and the borrowing capacity under our credit facilities to meet the cash requirements of our business. In January 2023, we shifted our capital allocation strategy to utilize our cash from operations for payments to our employees and vendors in the normal course of business and to reinvest in our business through capital expenditures. We then utilize our free cash flow (cash from operations less capital expenditures) to pay down debt to bring our leverage back to a range that is no greater than two to three times on a net debt-to-adjusted EBITDA basis.
Based on our current expectations and forecasts of future earnings and cash flows, we believe we have sufficient cash and available borrowings to support our operations and key business strategies for at least the next 12 months and we currently believe our cash flows and available borrowings, together with our access to the capital markets, are sufficient to support our longer term liquidity needs as well.
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Our primary financing arrangements are our Senior Secured Credit Facility, our 9.000% senior notes due in 2031 (the “9.000% Senior Notes”), and our accounts receivable securitization facility due in 2026 (the “ARS Facility”). The Senior Secured Credit Facility consists of a $750 million revolving loan facility due in 2030 (the “Revolving Loan Facility”), a senior secured term loan A facility due in 2030 (the “Term Loan A”), and a senior secured term loan B facility due in 2032 (the “Term Loan B”).
Our primary sources of liquidity are cash generated from global operations and cash available under our Revolving Loan Facility, our ARS Facility and our other international credit facilities.
We had the following borrowing capacity and available liquidity under our credit facilities as of June 28, 2025:
| As of June 28, 2025 | |||||||||||
| Borrowing Capacity | Available Liquidity | ||||||||||
| (dollars in thousands) | |||||||||||
| Senior Secured Credit Facility: | |||||||||||
Revolving Loan Facility(1) | $ | 750,000 | $ | 529,814 | |||||||
Accounts Receivable Securitization Facility(2) | 85,000 | 9,000 | |||||||||
Other international credit facilities(3) | 953 | (8,362) | |||||||||
| Total liquidity from credit facilities | $ | 835,953 | $ | 530,452 | |||||||
| Cash and cash equivalents | 220,343 | ||||||||||
| Total liquidity | $ | 750,795 | |||||||||
(1)Available liquidity is reduced by standby and trade letters of credit issued and outstanding under this facility.
(2)Borrowing availability under the ARS Facility is subject to a quarterly fluctuating facility limit ranging from $85 million to $115 million based on the applicable quarter and permitted only to the extent that the face of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans.
(3)Available liquidity for other international credit facilities is reduced for any outstanding international letters of credit. The international letters of credit are not outstanding under any specific credit facility and do not reduce actual borrowing capacity under the specific credit facilities.
The following have impacted or may impact our liquidity:
•We have principal and interest obligations under our debt and ongoing financial covenants under those debt facilities.
•In March 2025, we refinanced our Senior Secured Credit Facility including the senior secured revolving credit facility, the senior secured Term Loan A facility, and the senior secured Term Loan B facility which will mature in March 2030, March 2030, and March 2032, respectively. Additionally, we elected to exercise the optional redemption rights to redeem all of the outstanding 4.875% senior notes due 2026.
•The difficult global macroeconomic environment has had, and may continue to have, a negative impact on our business and the businesses of our customers.
•Our Board of Directors eliminated our quarterly cash dividend as we shifted our capital allocation strategy in January 2023 to pay down debt to bring our leverage back to a range that is no greater than two to three times on a net debt-to-adjusted EBITDA basis. The declaration of any future dividends and, if declared, the amount of any such dividends, will be subject to our actual future earnings, capital requirements, regulatory restrictions, debt covenants, other contractual restrictions and to the discretion of our Board of Directors.
•We have invested in global growth initiatives, as well as marketing and brand building.
•We previously launched a series of multi-year cost savings programs and recently began implementing significant restructuring and consolidation efforts within our supply chain network, both manufacturing and distribution, as well as corporate cost and headcount reductions within continuing operations to drive stronger operating performance and margin expansion.
•We expect capital expenditures of approximately $65 million in 2025, including capital expenditures of $50 million within investing cash flow activities and cloud computing arrangements of $15 million within operating cash flow activities.
•In the future, when it aligns with our capital allocation strategy and absent any covenant restrictions, we may pursue strategic business acquisitions.
•We have completed and may pursue strategic divestitures, such as the recently completed Initial Closing of our global Champion business and exit of our U.S.-based outlet store business in 2024 and the Deferred Closing of our
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global Champion business on January 31, 2025. In December 2024, we finalized plans to exit the Champion Japan business and expect to complete the sale of the business within the current fiscal year.
•We made required cash contributions of approximately $8 million to our U.S. pension plans in the first six months of 2025 and expect to make additional required contributions of approximately $4 million in 2025 based on the preliminary calculation by our actuary. We may also elect to make additional voluntary contributions.
•We may increase or decrease the portion of the current-year income of our foreign subsidiaries that we remit to the United States, which could impact our effective income tax rate. We have not changed our reinvestment strategy from the prior year with regards to our unremitted foreign earnings and intend to remit foreign earnings totaling $65 million.
Sources and Uses of Our Cash
The information presented below regarding the sources and uses of our cash flows for the six months ended June 28, 2025 and June 29, 2024 was derived from our condensed consolidated interim financial statements.
| Quarters Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| Operating activities | $ | (71,869) | $ | 104,597 | |||||||
| Investing activities | 6,175 | (24,438) | |||||||||
| Financing activities | 67,189 | (39,996) | |||||||||
| Effect of changes in foreign exchange rates on cash | 3,994 | (12,963) | |||||||||
| Change in cash and cash equivalents | 5,489 | 27,200 | |||||||||
| Cash and cash equivalents at beginning of year | 215,354 | 205,501 | |||||||||
| Cash and cash equivalents at end of period | $ | 220,843 | $ | 232,701 | |||||||
| Balances included in the Condensed Consolidated Balance Sheets: | |||||||||||
| Cash and cash equivalents | $ | 220,343 | $ | 213,267 | |||||||
| Cash and cash equivalents included in current assets held for sale | 500 | 19,434 | |||||||||
| Cash and cash equivalents at end of period | $ | 220,843 | $ | 232,701 | |||||||
Operating Activities
Our overall liquidity has historically been driven by our cash flow provided by operating activities, which is dependent on net operating results and changes in our working capital. Net cash used by operating activities in the first six months of 2025 was primarily driven by normal seasonal inventory builds ahead of our planned back-to-school programs and payments for variable compensation and taxes. While we typically use cash in the first six months due to normal inventory seasonal builds, we generated cash provided by operating activities in the first six months of 2024 primarily from working capital management.
Investing Activities
Net cash provided by investing activities in the first six months of 2025 of $6 million was primarily due to net proceeds received from dispositions which were partially offset by capital expenditures. The net cash used by investing activities in the first six months of 2024 was primarily the result of capital expenditures of $28 million.
Financing Activities
Net cash provided by financing activities of $67 million in the first six months of 2025 primarily resulted from net borrowings related to operations and the refinancing of our revolving loan facility, Term Loan A, and Term Loan B in addition to the redemption of the 4.875% Senior Notes. As a result of the debt refinancing completed during the first six months of 2025 we incurred debt issuance costs of $23 million. Net cash used by financing activities of $40 million in the first six months of 2024 primarily resulted from total scheduled repayments on the Term Loan A and the Term Loan B of $30 million and net repayments on our ARS Facility. See Note “Debt” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information.
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Financing Arrangements
In March 2025, we refinanced our Senior Secured Credit Facility which provides for a $750 million senior secured revolving credit facility maturing March 7, 2030, a $400 million senior secured Term Loan A facility maturing March 7, 2030, and a $1.1 billion senior secured Term Loan B facility maturing March 7, 2032. The net proceeds from the refinancing, together with cash on hand, were used to redeem our outstanding 4.875% Senior Notes due 2026 in the original aggregate principal amount of $900 million, to refinance our existing senior secured credit facilities, and to pay related fees and expenses. See Note “Debt” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information.
In May 2025, we amended the ARS Facility which extended the maturity date to May 2026 and reduced the 2025 quarterly fluctuating facility limit to $85,000 in the first and second quarters and $115,000 in the third and fourth quarters only to the extent that the face value of the receivables in the collateral pool, net of applicable concentrations, reserves and other deductions, exceeds the outstanding loans. Additionally, the amendment created three pricing tiers based on a consolidated total net leverage ratio. See Note “Debt” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information.
We believe our financing structure provides a secure base to support our operations and key business strategies. As of June 28, 2025, we were in compliance with all financial covenants under our credit facilities and other outstanding indebtedness. Under the terms of the Senior Secured Credit Facility, among other financial and non-financial covenants, we are required to maintain a minimum interest coverage ratio and a maximum total debt to EBITDA (earnings before interest, income taxes, depreciation expense and amortization, as computed pursuant to the Senior Secured Credit Facility), or leverage ratio, each of which is defined in the Senior Secured Credit Facility. The method of calculating all of the components used in the covenants is included in the Senior Secured Credit Facility.
We expect to maintain compliance with our covenants, as amended, for at least 12 months from the issuance of these financial statements based on our current expectations and forecasts, however economic conditions or the occurrence of events discussed under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 28, 2024 or other SEC filings could cause noncompliance. If economic conditions worsen or our earnings do not recover as currently estimated by management, this could impact our ability to maintain compliance with our amended financial covenants and require us to seek additional amendments to the Senior Secured Credit Facility. If we are not able to obtain such necessary additional amendments, this would lead to an event of default and, if not cured timely, our lenders could require us to repay our outstanding debt. In that situation, we may not be able to raise sufficient debt or equity capital, or divest assets, to refinance or repay the lenders.
For further details regarding our liquidity from our available cash balances and credit facilities see “Cash Requirements and Trends and Uncertainties Affecting Liquidity” above.
Critical Accounting Policies and Estimates
We have chosen accounting policies that we believe are appropriate to report our operating results and financial condition in conformity with accounting principles generally accepted in the United States. We apply these accounting policies in a consistent manner. Our significant accounting policies are discussed in Note “Summary of Significant Accounting Policies” to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 28, 2024.
The application of critical accounting policies requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. These estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances. We evaluate these estimates and assumptions on an ongoing basis and may retain outside consultants to assist in our evaluation. If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known. The critical accounting policies that involve the most significant management judgments and estimates used in preparation of our consolidated financial statements, or are the most sensitive to change from outside factors, are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 28, 2024. There have been no material changes in these policies from those described in our Annual Report on Form 10-K for the year ended December 28, 2024.
Recently Issued Accounting Pronouncements
For a summary of recently issued accounting pronouncements, see Note “Recent Accounting Pronouncements” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q.
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| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | ||||
There have been no material changes in our market risk exposures from those described in Item 7A of our Annual Report on Form 10-K for the year ended December 28, 2024.
| Item 4. | Controls and Procedures | ||||
Disclosure Controls and Procedures
As required by Exchange Act Rule 13a-15(b), our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 28, 2025.
Changes in Internal Control over Financial Reporting
In connection with the evaluation required by Exchange Act Rule 13a-15(d), our management, including our Chief Executive Officer and Chief Financial Officer, concluded that no changes in our internal control over financial reporting occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
| Item 1. | Legal Proceedings | ||||
We were named in a putative class action in connection with the previously disclosed ransomware incident, entitled Toussaint et al. v. HanesBrands,[sic] Inc. This lawsuit was filed on April 27, 2023 in the United States District Court for the Middle District of North Carolina, and followed the consolidation of two previously pending lawsuits, entitled Roman v. Hanes Brands,[sic] Inc., filed October 7, 2022, and Toussaint v. HanesBrands,[sic] Inc., filed October 14, 2022. The lawsuit alleged, among other things, negligence, negligence per se, breach of implied contract, invasion of privacy, unjust enrichment, breach of implied covenant of good faith and fair dealing and unfair business practices under the California Business and Professions Code. The lawsuit sought, among other things, monetary and injunctive relief. On April 2, 2024, the plaintiffs filed a motion for preliminary approval of a class action settlement. On November 5, 2024, the Court entered an order granting preliminary approval of the settlement, and on June 13, 2025, the Court granted final approval of the settlement. The settlement provides for class members to claim reimbursement for documented out-of-pocket losses related to the ransomware incident (limited to an aggregate cap of $100,000), as well as a choice of one of the following three forms of additional relief (with no aggregate cap): (1) two years of credit and identity monitoring services; (2) a one-time use credit for purchase of products on the www.hanes.com website; or (3) a cash payment. We also agreed to undertake certain injunctive relief and to pay an agreed upon amount of attorneys’ fees, costs, and service awards to the plaintiffs. We do not expect this settlement to have a material adverse effect on our consolidated financial position or results of operations. We currently anticipate the cost of the settlement to be less than $1 million.
We are also subject to various claims and legal actions that occur from time to time in the ordinary course of our business. However, we are not party to any pending legal proceedings that we believe could have a material adverse effect on our business, results of operations, financial condition or cash flows.
| Item 1A. | Risk Factors | ||||
The risk factors that affect our business and financial results are discussed in Part I, Item 1A., of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. There are no material changes to the risk factors previously disclosed, nor have we identified any previously undisclosed risks that could materially adversely affect our business and financial results. Additional risks and uncertainties not presently known to us or that we currently deem to be immaterial also may affect us. The occurrence of any of these known or unknown risks could have a material adverse ultimate impact on our business, financial condition, liquidity or results of operations.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||||
None.
| Item 3. | Defaults Upon Senior Securities | ||||
None.
| Item 4. | Mine Safety Disclosures | ||||
Not applicable.
| Item 5. | Other Information | ||||
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| Item 6. | Exhibits | ||||
Exhibit Number | Description | |||||||
| 2.1 | Stock and Asset Purchase Agreement, dated as of June 4, 2024, by and among Hanesbrands Inc., ABG-Sparrow IPCo LLC, and, solely for purposes of Section 11.17, Authentic Brands Group LLC (incorporated by reference from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 6, 2024).* | |||||||
| 2.2 | First Amendment to Stock and Asset Purchase Agreement, dated as of September 25, 2024, between Hanesbrands Inc. and ABG-Champion LLC (f/k/a ABG-Sparrow IPCo LLC) (incorporated by reference to Exhibit 2.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 7, 2024). | |||||||
| 3.1 | Articles of Amendment and Restatement of Hanesbrands Inc. (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 5, 2006). | |||||||
| 3.2 | Articles Supplementary (Junior Participating Preferred Stock, Series A) (incorporated by reference from Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 5, 2006). | |||||||
| 3.3 | Articles of Amendment to Articles of Amendment and Restatement of Hanesbrands Inc. (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 28, 2015). | |||||||
| 3.4 | Articles Supplementary (Reclassifying Junior Participating Preferred Stock, Series A) (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 2, 2015). | |||||||
| 3.5 | Amended and Restated Bylaws of Hanesbrands Inc., as amended on September 29, 2022 (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 30, 2022). | |||||||
| 10.1 | Second Amendment of Hanesbrands Inc. 2020 Omnibus Incentive Plan (incorporated by reference from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 2025).** | |||||||
| 10.2 | Amendment No. 5, dated as of May 21, 2025, to Master Receivables Purchase Agreement, by and between Hanesbrands Inc. and MUFG Bank, LTD. | |||||||
| 10.3 | Form of Severance/Change in Control Agreement entered into by and between Hanesbrands Inc. and certain of its executive officers and schedule of all such agreements with current executive officers.** | |||||||
| 31.1 | Certification of Stephen B. Bratspies, Chief Executive Officer. | |||||||
| 31.2 | Certification of M. Scott Lewis, Chief Financial Officer. | |||||||
| 32.1 | Section 1350 Certification of Stephen B. Bratspies, Chief Executive Officer. | |||||||
| 32.2 | Section 1350 Certification of M. Scott Lewis, Chief Financial Officer. | |||||||
| 101.INS XBRL | Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
| 101.SCH XBRL | Inline Taxonomy Extension Schema Document | |||||||
| 101.CAL XBRL | Inline Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.LAB XBRL | Inline Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE XBRL | Inline Taxonomy Extension Presentation Linkbase Document | |||||||
| 101.DEF XBRL | Inline Taxonomy Extension Definition Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document and included in Exhibit 101) | |||||||
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| * | Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally to the U.S. Securities and Exchange Commission a copy of any omitted schedule or exhibit upon request. | ||||
| ** | Management contract or compensatory plans or arrangements. | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| HANESBRANDS INC. | ||||||||
| By: | /s/ M. Scott Lewis | |||||||
| M. Scott Lewis Chief Financial Officer and Chief Accounting Officer (Duly authorized officer, principal financial officer and principal accounting officer) | ||||||||
Date: August 7, 2025
49
Hanesbrands Inc
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Apparel Manufacturing
Retail-apparel & Accessory Stores
United States
WINSTON-SALEM