Shares of Hanesbrands Inc. fell in after-market trading following the firm’s report of second-quarter results that missed Wall Street’s estimates.
The company said net income rose 35 percent to $128.1 million for the period ended July 2, or 34 cents a diluted share, compared with net income of $94.9 million, or 23 cents, a year ago. On an adjusted basis, excluding charges related to acquisitions, integration and debt refinancing, earnings per share were 51 cents. The company in the second quarter completed its acquisitions of Champion Europe and Pacific Brands Ltd. of Australia. Net sales were down 3.2 percent to $1.47 billion from $1.52 billion.
Wall Street was expecting EPS of 52 cents on sales of $1.53 billion. Shares of Hanesbrands had closed Tuesday’s trading session on the Big Board down 3.4 percent to $25.65, but then fell 5 percent to $24.38 after the company posted its quarterly results. The company reported earnings after the markets closed.
For the six months, net income rose 41.3 percent to $208.4 million, or 54 cents a diluted share, on a 1.4 percent decline in net sales to $2.69 billion.
By segment, innerwear sales were down 4.7 percent to $749.2 million; activewear decreased 3.6 percent to $367.4 million and direct-to-consumer declined 3.7 percent to $86.5 million. International sales rose 1.9 percent to $269.7 million.
Gerald W. Evans Jr., chief operating officer and chief executive officer-elect, said, “The second quarter, while having a tough comparison as expected to a strong year-ago quarter, came in on plan overall. Our growth initiatives for the second half are unfolding as planned and are tracking to our full-year guidance of 8 percent growth in net sales at the midpoint and double-digit growth in EPS.”
Evans said the company is “confident in our plans for the year, with our sales, operating profit and EPS performance all tracking right in line with our expectations and consistent with our full-year guidance.”
The company said it expects net sales of $6.15 billion to $6.25 billion for the year, and diluted EPS in the range of $1.44 to $1.54. That compares with its previous range of $1.51 to $1.57. Full-year guidance includes expectations for its newly acquired Champion Europe and Pacific Brands businesses.
In the conference call to Wall Street analysts, Richard A. Noll, chairman and ceo, in his swan song to the Street, said, “This is my 40th and last earnings call. It has been quite a ride.…Over the last 10 years, we’ve had three distinct phases. The first to transform our supply chian and cost structure to make us competitive globally. The second, to drive Innovate-to-Elevate to expand our operating margins. And the third crafting both of these strategies onto acquisitions. Over that time, we’ve built a strong business model that creates value by nurturing world-class brands, delivering innovations to a broad base of consumers, driving volume through our highly efficient global supply chain and effectively deploying our cash flow.”
Noll added that over the 10 years, the company has increased revenue from $4 billion to nearly $7 billion, and expanded its employment base from 50,000 to 70,000 people. “We’ve completed eight acquisitions, mainly internationally, with international sales now close to a third of the business,” he said.
As for the future, Noll said the firm’s proven strategies have “significant scale and are repeatable. At our current profit run rate, we should be able to generate the next $4 billion of cash flow in less than half the time, which positions us extremely well to continue to annually generate solid double-digit shareholder returns.”
Noll also said under Evans’ leadership, the company has created a “low-cost global supply chain, strengthened our world-class brands with Innovate-to Elevate and seamlessly integrated several acquisitions.”