HanesBrands Inc. reported an almost 60 percent decline in third-quarter earnings Wednesday because of onetime charges and said it plans to raise prices in the U.S. next year.
For the three months ended Sept. 27, profits for the Winston-Salem, N.C.-based apparel maker fell 59.1 percent to $15.9 million, or 17 cents a diluted share, from $38.9 million, or 40 cents a share, last year. Third-quarter sales were flat at $1.15 billion compared with a year ago.
The company attributed the profit decline mostly to $26.3 million in restructuring costs and the liquidation of Mervyns, the 149-store regional department chain. Hanesbrands previously said that it expected a $5.5 million bad debt charge related to the liquidation. Barring one-time charges, third-quarter earnings would have been 56 cents a share. That would have beaten the estimates of analysts polled by Yahoo Finance, who, on average, predicted 54 cents a share.
“We continued our strategic execution in the third quarter and delivered comparable sales and solid earnings per share in a difficult environment,” chief executive offi cer Richard Noll said. “We remain optimistic about our earnings potential for the fourth quarter due to favorability of expenses that may more than offset the challenges of higher commodity costs and an uncertain sales environment.”
The company said the rising cost of raw materials, especially cotton, will force it to raise domestic prices in mid-first quarter 2009 by an average of 4 percent.
For the first nine months of 2008, the firm’s profits increased 43.2 percent to $109.3 million, or $1.14 a share, from $76.3 million, or 79 cents a share, last year. Restructuring costs and interest expenses declined. Sales in the first three quarters fell 3.1 percent to $3.2 billion from $3.3 billion a year ago.