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.