Why Hanesbrands Shares Popped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of intimate apparel company Hanesbrands (NYS: HBI) shot higher by as much as 11% after the company reported a smaller loss than Wall Street had expected.

So what: The maker of the Hanes, Playtex, and Champion brands reported a first-quarter loss of $0.27 per share on a 3% drop in revenue to $1.01 billion. The company's EPS results slid by Wall Street's expectations for a loss of $0.33 on sales of $1 billion and were even better than Hanesbrands' original forecast that it would lose $0.35. Hanesbrands continued to blame cotton inflation for its poor results but maintained that the worst has been priced in and a turnaround is under way. The company held firm on its full-year forecast at $2.50-$2.60 in EPS.


Now what: Hanesbrands is an apparel maker I happen to actually like, but I'm concerned by how much cotton inflation has hit the stock despite only a marginal rally in cotton prices. The company does seem on target to hit its sales and earnings goals for the remainder of the year, so I'll let this quarter's loss slide (for now), but consider Hanesbrands on watch if it's unable to pass higher costs onto consumers.

Craving more input? Start by adding Hanesbrands to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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