HanesBrands Q2 Earnings Surge on Margin Boost

hanesmeshWinston-Salem, NC—Higher sales and lower costs boosted margins giving HanesBrands a surge in its second quarter earnings.

For the quarter ended June 29, the apparel and hosiery company posted net income of $121.59 million, or $1.19 a share, compared with $1.23 million or 1 cent a share, in the year-ago period. Income from continuing operations rose to $121.59 million, or $1.19 a share from $67.32 million, or 67 cents a share, in the prior year. 2012 results included loss from discontinued operations of $66.09 million.

The results sailed past analysts’ average estimate that expected 94 cents a share.

Net revenue rose 1.6% to $1.20 billion, just missing analysts’ estimate for $1.21 million in sales. Gross margin widened to 36.3% from 31.1% due to lower cotton costs and improvements in the supply chain.

According to HanesBrands, its “Innovate-to-Elevate” platforms, which integrate the strengths of its brands, low-cost supply chain and product innovation, continue to help “We achieved record profit margins and earnings per share in the second quarter with each business segment achieving improved profitability,” said Richard A. Noll, chairman/ceo.

Plans to Acquire Rival Maidenform

He added that the company is on “solid footing to continue to deliver value for consumers, retailers and investors.”

The positive earnings report comes on the heels of HanesBrands’ announcement last week that it plans to purchase Maidenform Brands Inc. in a $575 million deal that may close by the end of the year.

“We have moved into the low end of our target range for sustained operating profitability sooner than anticipated, and our cash flow and solid balance sheet have allowed us to begin paying quarterly dividends and agree to acquire Maidenform Brands,” Noll said.

With the Maidenform acquisition, HanesBrands is expected to add $500 million in sales, giving the company a projected $5 billion in annual revenue.

HanesBrands also revised its full-year earnings forecast. The company now expects earnings per share of $3.50 to $3.65 and net sales of $4.55 billion.

The company’s previous guidance was $3.25 to $3.40 a share and net sales of $4.6 billion.

Analysts’ consensus expects HanesBrands to report earnings of $3.46 a share on revenue of $4.59 billion.

 

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Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com