HanesBrands Raises Outlook as Q2 Profit Rises

In What's New, Industry News by Jeff Prine

hanesWinston-Salem, NC—HanesBrands Inc. said Wednesday it returned to increased profitability, crediting higher sales and reduced costs, that led to a $154.6 million profit.

For its second quarter, the apparel and hosiery giant posted net income of $154.58 million, or $1.51 a share, up from $121.59 million, or $1.19 a share in the previous-year quarter. Included in the results were charges of 20 cents a share related to the acquisition of Maidenform Brands, Inc., and other actions.

Adjusted earnings were $1.71 a share, ahead of analysts’ average estimate for $1.50 a share.

Net sales grew 11.9% to $1.34 billion from $1.20 billion in the same period last year, reflecting the acquisition of Maidenform and on Activewear segment growth. Analysts’ consensus estimate was for $1.35 billion in sales.

‘Performance Momentum’

All four apparel categories showing solid gains despite what HanesBrands called “a continuing uncertain economic environment.” Innerwear sales, which include hosiery, rose 14.7% to $788.3 million, while Activewear was up 8% to $317.8 million, direct to consumer up 12.7% to $104.3 million and international up 5.2% to $131.5 million.

Gross margin for the quarter was 37.6%, up from 36.3% in the year-ago quarter. Operating margin edged up to 15.4% from 15.1% last year.

Cost of sales increased 9.7% to $837.7 million, and selling, general and administrative expenses rose 17% to $297.2 million.

Chairman/CEO Richard Noll touted the company’s innovate-to-elevate apparel strategy, along with its global supply chain, for the quarterly performance. The strategy emphasizes value-added products that can be made at a lower cost and sold at a higher price.

“We remain confident in our business model and our performance momentum,” Noll said.

Looking ahead, HanesBrands raised its outlook based upon its net income increase and its acquisitions. Now the company expected full year earnings to increase by 40 cents to a range of $5.20 to $5.40. Adjusted operating profit, which excludes one-time integration and other charges, was lifted by $45 million to a range of $710 million to $730 million. Revenue projections are for $5.07 billion.

Meanwhile, analysts forecast earnings of $4.99 a share for the year on revenues of $5.18 billion.


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