(Filed Under Financial and General Interest News). HanesBrands reported a strong increase in net income as well as a more modest increase in sales for the third quarter. According to the report filed on the company’s investor relations page, "Net sales for the quarter ended Sept. 29, 2012, totaled $1.22 billion, up from $1.19 billion a year ago. EPS growth contributors included Innerwear segment performance and across-the-board tight expense control."
Net income for the period rose to $109,892,000 versus $90,832,000 for the same quarter last year. HanesBrands also provided guidance for the full year 2012, increasing "the low end of its EPS range by 4 cents to $2.54 to $2.60. It expects net sales of approximately $4.52 billion and free cash flow of approximately $500 million, the high end of its previous range."
“We are executing well and had a very good quarter as reflected in our operating margin, free cash flow and EPS, all of which are all-time quarterly records,” Hanes chairman and CEO Richard Noll said. “Cotton inflation is behind us, and we are generating momentum for continued growth.”
Innnerwear was emphasized among the "third quarter business highlights" by HanesBrands. "Innerwear segment net sales increased 3 percent in the quarter and operating profit increased 10 percent. Excluding sales declines to a mid-tier retail customer that is undergoing a major strategic shift, Innerwear sales would have increased 5 percent in the third quarter versus last year," the company reported. "Innerwear sales growth has increased for three consecutive quarters in 2012. The 3 percent growth in the third quarter built on 2 percent growth in the second quarter and 1 percent growth in the first quarter. Hanes and Champion underwear combined for double-digit growth and women’s panties growth was in the mid-single digits. New-product innovation contributed to growth, including Hanes ComfortBlend men’s underwear, Hanes Classics slim fit and stretch premium underwear T-shirts, and Bali and Barely There Smart Size seamless bras."
Another highlight the company noted was that "The company’s overall operating profit margin increased 60 basis points to 12.8 percent in the quarter, reflecting continuous sequential improvement since the first quarter. Selling, general and administrative expenses decreased as a percentage of net sales, mitigating the impact of higher cotton costs. The company generated free cash flow of $287 million in the quarter and has now completed the retirement of approximately $300 million of floating-rate bond debt as planned in 2012.
Other highlights mentioned included, "Outerwear segment net sales increased 5 percent in the quarter, while operating profit declined 4 percent. Sales for Champion activewear and Gear for Sports licensed apparel increased, but higher cotton costs suppressed segment operating profitability"; "International segment net sales declined 3 percent, while increasing 2 percent on a constant currency basis, and operating profit increased 19 percent on a reported basis"; and "Net sales for the direct to consumer segment increased 2 percent, and operating profit increased 18 percent."
In detailing its full year 2012 guidance revision, the company predicted "diluted EPS of $2.54 to $2.60, compared with previous guidance of $2.50 to $2.60. Net sales are expected to increase approximately 2 percent to approximately $4.52 billion, compared with previous guidance of $4.52 billion to $4.57 billion. Full-year free cash flow is expected to be approximately $500 million, the high end of the previous range of $400 million to $500 million." For the fourth quarter the company is expecting "net sales of approximately $1.13 billion to $1.17 billion and EPS of $1.00 to $1.06." In making these predictions, HanesBrands noted that "Product pricing, shelf space, and promotion plans for the remainder of 2012 have been finalized with major retail accounts. All commodity costs have been fixed for the remainder of the year, with the company incurring significantly lower cotton and other inflation impacts for the remainder of the year."
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