Strength in its outerwear and international businesses, supported by growth in men’s underwear, helped Hanesbrands Inc. overcome a decline in women’s innerwear sales and expand first-quarter profits 31.8 percent.
This story first appeared in the April 21, 2011 issue of WWD. Subscribe Today.
The firm raised full-year guidance which, along with its earnings and a strong day on Wall Street, helped move its shares up $1.85, or 6.4 percent, to $30.99. They hit a 52-week high of $32.49 in morning trading Wednesday.
For the three months ended April 2, income increased to $48.1 million, or 49 cents a diluted share, 16 cents better than the 33 cents expected, on average, by analysts surveyed by Yahoo Finance. Profit in the 2010 quarter was $36.5 million, or 37 cents. Sales rose 11.7 percent to $1.04 billion from $927.8 million.
Innerwear sales rose slightly, but were up against more than $30 million of sales from new program shipments in the prior-year quarter. Increases in socks and men’s underwear were offset by a decline in women’s intimate apparel sales.
The firm’s outerwear segment, Gear for Sports, acquired in November, contributed 5 percentage points to the company’s overall sales gains. The outerwear segment also includes Hanes wholesale casualwear and Champion retail activewear.
Richard Noll, chairman and chief executive officer, said, “Our brands are strong and are performing well. We are raising prices appropriately to deal with input-cost inflation, and as we leverage our scale and infrastructure, the benefits of increased sales and acquisitions are dropping through to the bottom line.”
During a conference call, Noll said that “acquisitions are not a major part of our strategy but they clearly can be part of our overall strategy.” He said that while he’d taken a look at GoldToeMoretz at least five times in his tenure at Hanes, the company has passed each time because of the brand’s limited focus on socks and its primary position in department stores. Gildan Activewear Inc. earlier this month acquired GoldToe.
Noll also told the analysts that the company is fine from a pricing perspective. He said, “And overall I think we’re done with deflation in this industry, and we’re going to go into a period of moderate inflation. And that’s good for companies that have strong brands and supply chains that give visibility such as ours.”
The company raised full-year guidance of net sales to between $4.9 billion to $5 billion, up from previous guidance of between $4.85 billion to $5 billion. It now expects full-year earnings per share of $2.70 to $2.90, up from earlier guidance of $2.60 to $2.80.