The Champion brand picked up some of the slack during a difficult period for innerwear, helping Hanesbrands Inc. post first-quarter earnings that easily topped analysts’ estimates.

The Winston-Salem, N.C.-based intimates and activewear giant said the unseasonably cold weather throughout the quarter concluded March 29, combined with the shift of Easter into April from March of 2013, hurt sales of intimate apparel more than they did those of innerwear basics such as socks and panties.

“On the flip side, it positively impacted Champion, where we had some stronger fleece sales,” Richard Noll, chairman and chief executive officer, told analysts during a conference call to discuss results late Thursday.

The innerwear segment’s net sales increased 14.9 percent in the quarter, to $571.2 million, but would have been down 6 percent without the contribution of sales from Maidenform, acquired in October. Operating income for the unit rose 6.7 percent, to $95.8 million, an increase reduced to 1 percent without Maidenform’s addition.

Maidenform’s sales in the quarter, its first full period as part of Hanesbrands, were approximately $125 million.

The strength of Champion lifted the activewear unit’s sales 10.2 percent to $294.5 million while operating income, aided by strong sales and the corporate “Innovate-to-Elevate” strategy, rose 50.1 percent to $32 million. Operating margin rose 290 basis points to 10.9 percent of revenues.

Including about $35.8 million in after-tax charges related to the acquisition and integration of Maidenform, net income in the quarter fell 19.1 percent to $41.6 million, or 41 cents a diluted share, from $51.4 million, or 51 cents, in the prior-year period. Stripping out the Maidenform-related charges, earnings per diluted share were 76 cents, well beyond the 58 cents expected, on average, by analysts.

Revenues rose 12 percent to $1.06 billion from $945.5 million a year ago, below the $1.08 billion analysts’ consensus estimate. The firm said that, excluding Maidenform’s sales, net revenues on a constant currency basis were flat.

Gross margin contracted to 33.7 percent of sales from 34.6 percent a year ago but was up 50 basis points excluding charges related to the purchase of Maidenform.

The strong first-quarter showing prompted Hanesbrands to boost its full-year guidance by 20 cents a diluted share, to an EPS range of $4.80 to $5 on an adjusted basis. Revenue guidance remained at just under $5.1 billion, 10.2 percent above the $4.63 billion reported last year. About $500 million of this year’s total is expected to come from Maidenform.

The after-market disclosure of results lifted Hanesbrands’ shares 3.7 percent, to $78.25, in after-hours trading, following a 1.4 percent gain, to $75.43, during the regular trading day.

Noll said the integration of Maidenform was proceeding well, with completion expected in the current second quarter, which could “allow us to turn our attention to another acquisition as the year moves on.”

Consistent with standing policy, such a pick-up, he reiterated, would be more of a “bolt-on,” rather than something “huge[ly] transformational.”

He added that some acquisitions, like Maidenform, had crystallized quickly, whereas Gear for Sports had taken three years from start to finish.

“We are constantly talking to people,” he said.

load comments
blog comments powered by Disqus