Winston-Salem, NC—Strong growth in its outerwear and international business has helped HanesBrands to a 1.6% rise in second quarter profit, with product price increases helping the innerwear and hosiery maker offset higher input costs.
For the quarter ended July 2, HanesBrands, which includes Hanes, Champion, Playtex and Wonderbra reported net income of $86.8 million, or 87 cents a share, compared with $85.4 million, or 87 cents a share, a year ago.
Sales rose 14% to $1.23 billion, up from $1.075 billion in the same quarter 2010.
The sales and earnings were in line with analysts’ average estimates that expected a profit of 87 cents a share, on sales of $1.22 billion.
“We continued our strong start in 2011 and are performing in line with our growth expectations,” said Richard Noll, chairman and ceo. “We are leveraging this sales growth with our low-cost global supply chain and tight control of selling, general and administrative costs.”
Hosiery Sales and Profits Increase
By division, direct to consumers and hosiery both swung to increases in sales and operating profit from declines in the first quarter. The direct segment’s sales increased 4% from a year ago and operating profit was up 29%. Hosiery segment’s sales grew 6% and operating profit increased 10%
Innerwear sales rose 8%, thanks to double-digit growth in sales of socks, male underwear and women’s panties. The company has already raised the price of its cotton-intensive products in February and June to try to offset rising input costs.
Outerwear sales rose 26%, with strong contributions from Gear For Sports which was acquired last November, as well as Champion activewear.
And in its international markets, sales–excluding changes in currency exchange rates–rose 14% in the quarter while operating profit was up 7%, with higher demand in China, India, Japan, Korea, Mexico and Brazil.
Quarterly operating margin increased 70 basis points over the year-ago period, despite $51 million in higher cotton and commodity costs.
Looking ahead, HanesBrands said it still expects full-year earnings to rise 24% to 25% to between $2.70 and $2.90 per share, with net sales coming in 14% to 16% higher than last year at $4.9 billion to $5 billion. The company has locked in its cotton requirements for the full year.
For its third quarter, the company expects earnings to rise 30% from a year ago, approximately 82 cents per share, which is below analysts’ average estimate for 92 cents a share.