Hanesbrands Inc. said Wednesday that third-quarter profit almost tripled, partly because of tightly managed expenses and inventory.
Although quarterly sales fell, the company said it expected accelerated growth in 2010.
For the period ended Oct. 3, the owner of brands such as Hanes, Champion, Playtex and Wonderbra reported a 158.4 percent jump in net income to $41.1 million, or 43 cents a diluted share, versus a profit of $15.9 million, or 17 cents a share, in the year-ago quarter. Hanesbrands said diluted earnings per share excluding consolidation actions increased 21 percent to 63 cents, from 53 cents a year ago.
Net sales slid 8.2 percent to $1.06 billion, from $1.15 billion in 2008. Innerwear sales, the company’s biggest category, shrank 10 percent to $585.3 million, while revenues from outerwear, the second-largest category, fell 5.4 percent to $329.7 million, compared with a 21 percent decline in the first quarter.
The performance was 11 cents better than analysts’ consensus estimates for EPS, but lower than the $1.08 billion revenues expected.
Gross margin as a percentage of sales improved to 33.7 percent, from 29.6 percent in the same period last year, and the company ended the quarter with inventories of $1.14 billion, $153 million less than at the start of the year. Selling, general and administrative costs fell 2.7 percent to $248.3 million for the period.
In a conference call, chairman and chief executive officer Richard Knoll said the company has “not seen a sustained consistent rebound in consumer spending, but rather mixed results.” However, Knoll said the Winston-Salem, N.C.-based firm has met management’s expectations, and 2010 has “great potential” as projected sales combined with the company’s cost-saving initiatives should “drive greater operating profit growth.”
Knoll said in 2010, even if consumer spending remains soft, the company anticipates roughly 5 percent sales growth based on space gains, point-of sales trends for the holiday period, the outlook for the consumer climate and other factors.
“We have some of the strongest brands in the apparel industry, and we will enter 2010 with top-line momentum,” Knoll said. “For example, we expect at least high-single-digit growth of men’s underwear sales in 2010 solely as a result of net space gains for our Hanes brand at all major accounts and new distribution in the midtier, club store and dollar store channels.”
Net income for the nine months contracted 52.1 percent to $52.4 million, or 55 cents a diluted share, versus net income of $109.3 million, or $1.14 a share, last year. For the same period, revenue slid 9.7 percent to $2.90 billion, from $3.21 billion.
Shares closed Wednesday at $21.81, down $1.09 or 4.8 percent, prior to the earnings announcement but rebounded 1.3 percent, to $22.10, in early after-hours trading.
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