A reduction in expenses of more than $100 million allowed Hanesbrands Inc. to report a higher-than-expected profit despite lower sales in the first quarter.
In the three months ended March 30, the Winston-Salem, N.C.-based manufacturer of knitwear, innerwear and activewear posted net income of $51.4 million, or 51 cents a diluted share, 1 cent above the analyst consensus estimate of 50 cents. In the prior-year quarter, the firm reported a loss of $26.8 million, or 27 cents, 3 cents of which was attributed to discontinued operations.
Sales slipped 2.8 percent to $945.5 million from $973.1 million, just topping estimates of $945 million. Gross margin expanded 840 basis points to 34.6 percent of sales from 26.2 percent a year ago. Operating margin, just 1.1 percent in the 2012 quarter, reached 9 percent of sales.
While all four of its business units — innerwear, activewear, direct-to-consumer and international — experienced some degree of sales decline based on both what the firm described as a “sluggish retail environment” and its exit from several imagewear businesses, operating profits improved at all segments except international. The largest business, innerwear, saw profits expand 68.7 percent to $89.7 million on a 2.4 percent sales decline, to $497 million, while both activewear and direct-to-consumer reported operating profits versus losses a year ago. ComfortBlend apparel, Smart Sizes seamless bras and Tagless apparel secured gains in retail space.
In innerwear, the company said bras and socks experienced midsingle-digit increases with men’s underwear up slightly.
Lower expenses figured prominently in the bottom-line and margin improvements. Cost of sales dropped 13.9 percent, to $618.2 million from $718 million, while selling, general and administrative costs fell 0.9 percent, to $242.2 million from $244.5 million.
“We are pleased with our ongoing strategic execution, which resulted in improved profitability in the first quarter and bolsters our outlook for the rest of the year,” said Richard Noll, chairman and chief executive officer. “Our operating margin was strong, our brands are commanding more retail shelf space and our product innovation is working. We have more margin improvement potential ahead of us.”
Based on the quarterly results, the company reaffirmed its full-year guidance for net sales of approximately $4.6 billion and earnings of $3.25 to $3.40 a share.
Shares Tuesday closed at $48, up 99 cents or 2.1 percent, but slid $2, or 4.2 percent, back to $46 in after-hours trading following the disclosure of results.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty