Hanesbrands Inc.’s second-quarter profits topped Wall Street estimates.
For the three months ended July 1, net income rose 34.6 percent to $172.5 million, or 47 cents a diluted share, from $128.1 million, or 34 cents, a year ago. On an adjusted basis, earnings per share totaled 53 cents. Net sales were up 11.8 percent to $1.65 billion from $1.47 billion.
Wall Street was expecting EPS of 53 cents on net sales of $1.65 billion.
The company attributed the net sales gain primarily from “acquisition contributions.” Hanesbrands noted, “Organic sales trends improved sequentially for the second consecutive quarter, and the company continues to expect organic sales to turn positive and contribute to growth in the second half.”
The company said acquisitions last year — Champion Europe and Hanes Australasia — contributed $220 million in net sales in the second quarter. Organic sales slipped in the quarter, but mostly due to lower sales in innerwear and an unexpected timing shift of sports apparel sales to the third quarter. The company also said second-quarter sales in the online channel globally rose 25 percent, and represented 9 percent of total sales. Global Champion sales increased 7 percent in the period on a pro forma basis, the company said.
Gerald W. Evans Jr., chief executive officer, said, “Organic sales trends continued to improve sequentially, acquisitions are contributing value as expected, and our cash-flow efforts, including disciplined inventory management, are generating strong results.”
Evans also said, “Our team is doing a great job executing our Sell More, Spend Less, Generate Cash strategies and laying the foundation for taking our performance to the next level in the years to come through our Project Booster initiative. We are planning for the future while executive in the present.”
Project Booster is a multiyear initiative to generate investment for sales growth, reduce costs and increase cash flow. The program is expected to generate $150 million in annualized cost savings, with annualized reinvestment of $50 million of the savings for targeted growth opportunities, Hanesbrands said.
Evans told Wall Street analysts on the company’s conference call that “cash flow from operations year-to-date was up over $160 million from last year. Overall, the year is unfolding as expected and we’re confident in our ability to deliver on our guidance for the remainder of the year.”
The ceo also said that the innerwear business “remains on track to return to growth in the second half,” adding that it was partly driven by stabilizing shelf space in the intimates business.
Shares of Hanesbrands rose 0.5 percent to close at $23.04 in Big Board trading, and then gained 4.2 percent to $24 in after-hours trading once the quarterly results were released.