Winston-Salem, NC—Hanesbrands Inc. reported Tuesday that its fourth quarter profit doubled from the previous year, thanks to exiting under-performing businesses, successfully managing cotton inflation and reducing its debt.
For the quarter ended Dec. 29, the apparel, hosiery and innerwear maker posted net income of $80.4 million, or $1.07 a share, compared to $41 million in the year ago period.
Total net revenue increased 5% to $1.15 billion compared with the year-ago quarter and increased 2% to $4.53 billion for the full fiscal year. Full-year sales increased 4% excluding the managed decline in the branded printwear division and the decline in JCPenney which is undergoing a strategic shift.
Since being spunoff as a separate company from Sara Lee Corp. in 2006, Hanesbrands ha reduced its $2.6 billion debt to $1.25 billion as of Dec. 31. The company plans to pay another $250 million this year out of a projected $350 million to $450 million in free cash flow.
“By reducing bond debt by $750 million over the past 13 months, we have ended our era of high debt leverage, and the momentum of strong results in the back half of 2012 positions us well for continued profit growth in 2013,” Richard Noll, chairman/ceo, said.
More Acquisitions Possible?
The stronger financial position could allow the company to pay a dividend, conduct a share-repurchase program or make more acquisitions in key apparel categories.
Each of the company’s business segments reported at least double-digit operating profit growth in the quarter. The Innerwear division was the strongest contributor to full-year results, delivering 18% growth in operating profit.
For the full year, Hanesbrands had a 38% decrease in net income to $164.7 million. The company had a $67.8 million loss related to discontinued operations, primarily the decisions to exit its European imagewear screen-print business and put more focus on its Hanes and Champion brands within its branded printwear division.
“The operating margin of 13% demonstrates the benefits of our multi-year efforts of building our brand, filling our innovation pipeline, and transforming our supply chain to build a more profitable business,” Noll said. “More specifically, our leading brands remain strong and should only strengthen as we increase our media spending this year. The innovation we have at retail and in the pipeline to elevate strategy is contributing sales and importantly margins for 2013.”
Hanesbrands confirmed its fiscal 2013 earnings forecast of a range of $3.25 to $3.40, but forecast a $40 million to $50 million revenue decline in its branded printwear category as it deemphasizes commodity apparel products.