Winston-Salem, NC–HanesBrands reported Thursday afternoon a third consecutive year of record net sales and profits, but missed sales expectations and issued a weak forecast.For the three months ended Jan. 2, the innerwear and hosiery maker posted a profit of $174.68 million, or 44 cents a share, ahead of the 148.72 million, or 36 cents a share, in last year’s fourth quarter. However, despite the increase it fell short of analysts’ estimate for 46 cents a share.
Net sales were down 7.4% to $1.4 billion, “due to decline in traffic and lower sales in all the operating segments.” On a constant currency basis and excluding the effects of the acquisitions and exit of a retailer in Canada, sales declined 5%. Analysts had expected sales of $1.53 billion.
Gross profit decreased 3.7% to $556.0 million. Gross margin, however, widened 150 basis points (bps) to 39.4% due to lower cost of sales.
“We delivered our third consecutive record year in 2015, although we are disappointed with our fourth-quarter performance,” Chairman/CEO Richard A. Noll said. “For 2016, I feel confident in our growth expectations and outlook for a fourth consecutive year with a double-digit increase in adjusted EPS.”
HanesBrands’ activewear segment declined 1.3%, to $368.1 million. Activewear core sales, which are adjusted for currency fluctuations and exclude revenue from acquisitions before their anniversary, fell 12%, driven by lower traffic in the U.S.
Innerwear sales declined 5.9%, to $658.4 million, while core sales declined 2%.
The international segment posted a 17% sales decline, to $284.4 million.
The company reported that “retail traffic declined by high-single-digit percentages in November and the first three weeks of December. The prolonged traffic declines weighed on point-of-sale trends and caused retailers to pull back on orders, impacting shipments for both replenishment Innerwear and cold-weather and replenishment Activewear. Improvement in retail traffic and Hanes’ point-of-sale sell-through in the latter third of December and into January was too late to influence fourth-quarter shipments.”
Going forward, HanesBrands expects to make $1.85 to $1.91 a share on $5.8 billion to $5.9 billion in sales for the year, compared with analysts’ projections of $1.90 a share on $6.04 billion in sales.