"This is a slow-volume bounce to lower-highs for what's been one of our best SELL ideas in a raging bull market for US Equities," Hedgeye CEO Keith McCullough writes on Hanesbrands.
Here are a few quick thoughts/reminders from Retail analyst Brian McGough on the fourth quarter financial results for Hanesbrands (HBI):
- 4Q organic growth rate -5.5% on top of -10% in 4Q last year. That included higher finished goods inventory, and higher DSOs – which appears to be HBI pushing cancelled WMT orders to TGT.
- EPS missed by 5 cents, or 9%, while interest was slightly below guidance, tax rate was lower than guided, and non-GAAP charges were slightly above guidance. The real EPS performance was more like $0.49 vs the reported $0.53.
- CFFO missed the annual target 22% miss even with only 2 months of the year to go when guided, despite management being " very confident" in the numbers.
- Leverage back up to 4.2x, committed 60% of operating cash to dividends, mitigating ability to do deals or invest in the business to grow.
When roll-ups come to an end, it is a very ugly picture. There’s more ugliness to come. This cash flow draw down was the first domino.
