Hanesbrands Inc. registered increases in first-quarter sales and profits that narrowly missed analysts’ consensus estimates and raised its full-year guidance to reflect the acquisition of Knights Apparel completed earlier this month.
In the three months ended April 4, the Winston-Salem, N.C.-based innerwear and activewear maker posted net income of $52.6 million, or 13 cents a diluted share, 26.7 percent above the $41.6 million, or 10 cents, recorded during the first quarter of fiscal 2013.
Adjusted EPS, excluding acquisition-related and other special items, was 22 cents a diluted share, 1 cent below the 23-cent consensus estimate.
Revenues rose 14.1 percent, to $1.21 billion from $1.06 billion a year ago, falling slightly below the $1.23 billion expected, on average, by analysts. Stripping out $184 million in sales contributed by DBApparel, acquired last August, revenues would have declined 3.3 percent to $1.02 billion. Gross margin improved to 36.9 percent of sales from 33.7 percent a year ago.
The purchase of DBApparel, which does the lion’s share of its business in Europe, transformed Hanesbrands’ international operations. Revenues more than doubled to $283.2 million from $110 million in last year’s quarter, prior to the closing of the acquisition, and operating profit in international nearly tripled, rising to $22.1 million from $8.2 million.
Innerwear revenues declined 4.4 percent to $546.2 million and direct-to-consumer sales dropped 2.6 percent to $81.5 million. Activewear sales were up 1.2 percent to $298.1 million as “double-digit growth in Gear for Sports was somewhat offset by Champion,” said Gerald Evans, chief operating officer.
The company expects double-digit gains in the Champion business during the second quarter, whereas the growth rate last year was heavily weighted towards the first quarter.
“Our acquisition strategy continues to create value with DBApparel, Maidenform and Gear for Sports all contributing substantially to our double-digit growth,” said Richard Noll, chairman and chief executive officer.
The company raised its full-year guidance in response to the April 8 closing of its acquisition of Knights, a leading supplier of licensed collegiate apparel to the mass channel. The firm now expects revenues of between $5.9 billion and $5.95 billion, adjusted operating income of $873 million and adjusted EPS of $1.61 to $1.66. When the company reported fourth-quarter results in January, it anticipated revenues of $5.78 billion to $5.83 billion, adjusted operating income of between $835 million and $855 million and EPS in a range of $1.58 to $1.63.