Hanesbrands Drops Its Dividend as Times Get Tough

Innerwear and activewear manufacturer Hanesbrands (NYSE: HBI) beat its own guidance when it reported its fourth-quarter results, but the company is preparing for a very tough 2023. Debt reduction is now the top priority, and a victim of this shift is the dividend. Hanesbrands has decided to eliminate the dividend entirely, a move that prompted investors to dump the stock on Thursday.For the long-term health of the company, getting rid of the dividend for now is the right course of action. With sales plunging and margins contracting, Hanesbrands needs all the cash it can get its hands on to bring its debt levels and interest payments down.Hanesbrands suffered a year-over-year sales decline of 16% in the fourth quarter. A slowdown in consumer spending in the U.S. is part of the problem, but retailers are also reducing their inventories. That means replenishment orders are down, which has more than offset Hanesbrands' recent price increases.Continue reading
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