Winston-Salem, NC—Improving sales at its Hanes and Champion brands helped to give HanesBrands Inc. a 21% lift in its third quarter profit, the company said Tuesday.
For the quarter ended Sept. 29, the innerwear, hosiery and sock giant posted net income of $109.9 million, or $1.09 a share, from $90.8 million, or 91 cents a share.
Total revenue rose 3% to $1.22 billion from $1.19 billion last year. Analysts’ average estimate expected earnings of $1.06 a share on sales of $1.22 billion.
The company attributed the gains to sales increases in its innerwear and outerwear divisions in addition to across-the-board expense controls.
“We are executing well and had a very good quarter as reflected in our operating margin, free cash flow and EPS, all of which are all-time quarterly records,” said Richard Noll, Hanesbrands’ chairman/ceo. “Cotton inflation is behind us, and we are generating momentum for continued growth.”
Hanes and Champion underwear were the strongest performers, growing at double digit rates. Net sales at the company’s outerwear division increased 5% largely due to its Champion activewear.
Innerwear sales were strong, too, with new products ahead of plan, but “gross overall performance was diluted by softness at JCPenney. In fact, Penney was responsible for the entire decline in bras and reduced total Innerwear segment growth by 2 points in the quarter,” the company said.
The company’s international segment net sales declined 3%.
Gross margins for the quarter came in at 32.8%, slightly better than expectations. Gross margins were down about 200 basis points or $14 million from last year’s third quarter, primarily due to cotton costs that were 37% higher than prior year from 97 cents last year to $1.33 per pound this year.
Hanesbrands updated its fourth quarter forecast to $1 to $1.06 a share on sales of $1.13 billion to $1.17 billion. Analysts’ estimate expects earnings of $1.07 a share on sales of $1.16 billion.
The company also revised upward its full year guidance to $2.54 to $2.60 a share from its previous forecast for $2.50 to $2.60 a share. Net sales are expected to increase approximately 2% to about $4.52 billion, compared with previous guidance of $4.52 billion to $4.57 billion. Analyst’s consensus expects profit per share of $2.56 on revenue of $4.54 billion.