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Hanesbrands Inc. late Wednesday lifted its projections for the new year after easily beating fourth-quarter expectations.
For the quarter ended Dec. 28, the Winston-Salem, N.C.-based innerwear and knitwear giant reported net income of $32.3 million, or 32 cents a diluted share, down 59.9 percent from the $80.4 million, or 81 cents, reported in the final quarter of 2012. Eliminating onetime items, such as acquisition and integration expenses related to its acquisition of Maidenform Brands Inc. in the most recent quarter and debt repayment expenses in the prior-year period, earnings per share hit 98 cents, better than the 90 cents expected, on average, by analysts but below the $1.07 reported in the 2012 quarter.
Net sales advanced 11.5 percent to $1.29 billion from $1.15 billion, with Maidenform, acquired for $581 million on Oct. 7, contributing about $100 million in net sales. Maidenform sales accounted for about 9 percent of the sales increases, and the company’s ongoing operations, including the Hanes and Champion brands, added about 3 percent in top-line revenues. Gross margin pulled back to 33.2 percent of sales from 34.5 percent a year ago but was flat with the exclusion of the effects of the Maidenform purchase.
“We had an outstanding year in 2013 with four consecutive quarters of strong performance,” said Richard Noll, chairman and chief executive officer. “We achieved record results and reached significant milestones, including generating nearly $600 million of cash from operations.”
Noll, who’d projected adjusted EPS of $4.25 to $4.50 for 2014 as Hanesbrands reported third-quarter results at the end of October, now expects the figure for the current year to rise to between $4.60 and $4.80. Sales of just under $5.1 billion are expected to include about $500 million from Maidenform, which is expected to deliver about $25 million in operating income out of total adjusted operating income of between $640 million and $660 million.
For the full year, Hanesbrands’ net income more than doubled to $330.5 million, or $3.25 a diluted share, from $164.7 million, or $1.64, in 2012. Excluding Maidenform-related expenses last year and the effect of discontinued operations in 2012, adjusted EPS was $3.91 versus $2.62.
Gerald Evans, chief operating officer, pointed out to analysts on a Wednesday evening conference call that the company’s “brand power has enabled us to take low- to midsingle-digit price increases this year in several key categories that we expect will offset inflationary pressures and maintain our margins. It is becoming increasingly clear that apparel is in a moderate inflationary environment where it is critical to have strong brands to be able to offset these pressures.”