Hanesbrands Offers Abysmal 2023 Guidance and Eliminates Dividend, but We Still See Long-Term Value

Hanesbrands reported 2022 fourth-quarter results that were largely in line with our expectations and its mid-January preannouncement. However, this report was overshadowed by a disappointing 2023 outlook, a large non-cash write-down of deferred tax assets, and the news that it has chosen to eliminate its dividend to focus on debt reduction. While the latter was likely anticipated by the market (dividend yields have been close to 10%), we had expected that Hanes could continue to pay its dividend while working to refinance its $1.4 billion in spring 2024 debt maturities. However, the combination of higher interest rates and its lack of business momentum probably necessitated the move.