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current news

Hanesbrands 1Qt Loss

(Filed Under Financial and General Interest News). HanesBrands reported a net loss for the first quarter of 2012, ended March 31, of $0.27 per diluted share, compared with EPS of $0.49 in the year-ago first quarter. Net sales were $1.01 billion, a decrease of 3

percent compared with $1.04 billion a year ago.

The company noted, however that “the results were better than the company’s guidance for an EPS loss of up to $0.35 and net sales of approximately $1 billion.” In a statement that accompanied the results, the company added, “Sales, profits and cash flow are running consistent with, or better than, our plans. When coupled with the visibility of our pricing and costs for the rest of the year, we feel very good about our momentum and are confident in our ability

to achieve our full-year financial goals.”

Hanes chairman and CEO Richard A. Noll emphasized, “We are tracking consistent with our expectations, and now with the worst of the cotton inflation behind us,

our operating profit margin for the remainder of the year should average in the low double digits.”

The company statement noted, “Several of the company’s product categories, especially those that sustained the largest price increases to offset cotton inflation, generated solid sales growth and better than

expected retail point-of-sale growth in the quarter. On a percentage basis, Hanes men’s underwear sales increased mid-single digits, Hanes women’s panty sales increased in the high teens, and total innerwear segment sales, including sheer hosiery, increased 1

percent. In the outerwear segment, Champion activewear sales increased in the mid-teens.

“As expected, the dynamics in the wholesale imagewear screen-print category in the United States significantly impacted results. The imagewear loss in the quarter was the equivalent of $0.18 per share, and the company continues to expect a full-year imagewear loss of approximately $0.30. The company is slightly ahead of its plan to reposition domestic imagewear to focus on branded product categories and de-emphasize

the highly promotional sector, which is expected to result in a smaller, more profitable and less volatile operation in the longer term.

“As anticipated, cotton inflation also negatively

affected margins in the quarter, as did supply chain actions of $13 million to balance capacity with unit demand. Supply chain operations are performing well, and continued optimization is expected to yield substantial cost savings.

“Hanes will benefit from declining inventory levels for the rest of the year. Inventory reached its peak for the year in the first quarter and ended the quarter slightly lower than originally expected. Free cash flow was slightly better than a year ago.

“The company has good visibility to product pricing and costs for the remainder of the year. Product pricing has been confirmed with retailers for more than 95 percent of the company’s domestic unit volume.

Cotton costs are locked in through December.

“Hanes has reconfirmed its 2012 guidance of 2 percent to 4 percent net sales growth and EPS of $2.50 to $2.60. Consistent with these expectations, gross profit as a percent of sales is expected to reach the high 20s in the second quarter with an operating profit

margin in the mid- to high single digits. In the second half, gross margins are expected to improve to the low 30s, while the operating profit margin is expected to average in the low double digits.

“The company continues to expect fullyear free cash flow in the range of $400 million to $500 million. The company’s priority for use of free cash flow is to

deleverage its balance sheet by reducing long-term debt. The company ended the first quarter with long-term bond debt of $1.8 billion and expects to pay off approximately $300 million in floating-rate notes

in 2012. In 2013, the company’s goal is to pay off its $500 million of 8 percent notes, reducing bond debt to approximately $1 billion.

“Interest expense in 2012 is expected to be $15 million lower than 2011 as a result of debt reduction. The full-year tax rate is expected to be in the low double digits, consistent with the average of the past three years.

“The Innerwear segment, which now includes hosiery operations, reported a net sales increase of 1 percent over last year led by strong contributions from men’s underwear, women’s panties and sheer hosiery. Operating profit decreased 31 percent compared with last year. Outerwear segment sales decreased 9 percent but increased 4 percent excluding imagewear, with strong contributions from retail categories. In addition to strong Champion retail activewear sales, new Hanes retail casualwear programs partially offset lower Just My Size sales. Outerwear had an operating

loss in the quarter. Gear For Sports continues to perform well and is on plan to generate full-year synergies and operating profit of $40 million.

“International segment sales decreased 5 percent in the quarter, while operating profit fell 84 percent. In addition to significant cotton and other inflation, International results were affected by softness in the

European imagewear category, which is under the same review process that the company conducted for its U.S. imagewear category.

“The Direct to Consumer segment continues to make good progress improving operating margins. In the quarter, sales increased 2 percent and operating profit tripled.

“As a result of the reduced size of sheer hosiery and changing trends, HanesBrands decided in the first quarter of 2012 to change its external segment reporting to include hosiery operations within the Innerwear segment. Hosiery had previously been reported as a separate segment. Prior-year segment sales and operating profit results, including other minor allocation changes, have been revised to conform to the current-year presentation.”

more Financial and General Interest News >>

Published 05-09-2012 by -

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