Despite Acquisition Costs, Hanesbrands Q1 Profit Beats Estimate

Top Performer: Hanesbrands' Champion

Top Performer: Hanesbrands’ Champion

Winston-Salem, NC—Though sales in its activewear division lead by Champion helped Hanesbrands first quarter results, expenses relating to its purchase of Maidenform, hit the company’s profit, pushing it down 19%.

But adjusted earnings beat expectations and sales trends lead Hanesbrands to raise its earnings outlook.

Sales Boost from Maidenform

For the quarter ended March 29, the apparel, activewear and hosiery company reported late Thursday a profit of $41.6 million, or 41 cents a share, down from $51.4 million, or 51 cents a share, a year earlier. Excluding acquisition-related costs and other items, adjusted earnings were 76 cents a share. Analysts’ average estimate was for 58 cents a share.

Net revenue rose 12% to $1.06 billion, just shy of the $1.08 billion analysts’ forecast.

Gross margin narrowed to 33.7% from 34.6%, as cost of sales rose 14% to $702.6 million. Selling, general and administrative expenses rose 18% to $285 million.

“We had very strong first-quarter profitability and have raised our full-year profit guidance as a result of our continued confidence in our Innovate-to-Elevate strategy and our progress with the integration of Maidenform,” Hanes Chairman/ Richard A. Noll said. “Our Activewear segment achieved outstanding results across channels, particularly with our Champion brand at retail.”

Due to these results, Hanesbrands boosted its 2014 full year earnings forecast to between $4.80 to $5.00 a share, compared to the prior view of $4.60 to $4.80 a share. However, the company affirmed its outlook for net sales of slightly less than $5.1 billion.

Analysts’ consensus expects earnings of $4.73 a share on revenues of $5.08 billion for the year.

The company expects its Maidenform acquisition to contribute about $500 million in sales and about $30 million of operating profit in 2014.

 

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Jeff Prine

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