(Filed Under Financial and General Interest News). HanesBrands first quarter “Innerwear” category sales increased 1.3%, reversing direction from the four quarter 2015 when sales in that category had dropped 5.9%. The company had blamed its overall 7.4% sales decline in the fourth quarter on “historic warm weather” in the eastern two-thirds of the U.S.
Overall Hanes profits jumped 52.5% in the first period, while sales rose just .08%. For the quarter ended April 2, 2016 the company earned $80.3 million on sales of $1.22 billion compared to $52.6 million on sales of $1.21 billion for the quarter ended April 4, 2015.
In addiction to the increase in Innerwear sales, “Activewear” category sales increased 2.8% “benefiting from the acquisition of Knights Apparel while being negatively affected by the bankruptcy of a sporting goods retailer. International sales decreased 1 percent as a result of adverse currency exchange rates,” the company reported.
Hanes acknowledged the contributions of some of its recent acquisitions. “Knights Apparel, the collegiate licensed activewear business acquired in April 2015, performed well in the quarter with sales of approximately $21 million. Hanes also continued to reap acquisition synergy benefits from the acquisitions of Maidenform, Knights Apparel and Hanes Europe Innerwear.”
“We are off to a very good start and tracking to our plan to deliver another year of double-digit EPS growth,” declared Richard Noll, chairman and CEO. “We remain focused on our previously announced sales initiatives, reaping acquisition synergies, expanding margins, and developing growth plans for our pending acquisition of Champion Europe [see other article this issue].”
Looking ahead at the full year 2016, “the company continues to expect net sales of $5.8 billion to $5.9 billion; adjusted operating profit of $920 million to $950 million; adjusted EPS of $1.85 to $1.91; and record net cash from operations of $750 million to $850 million.” Hanes noted that its “guidance reflects benefits from the acquisitions of Maidenform, Knights Apparel and Hanes Europe Innerwear, which are expected to add $40 million in synergies in 2016.”
In the analysts conference call to discuss the quarter, Gerald Evans, COO, listed recent sales and marketing efforts. “One of the initiatives is to expand the space of our successful Innovate-to-Elevate platforms. For 2016, we secured new space for various X-Temp products in the mass and mid-tier channels.”
“A second initiative is to ensure we are focusing on our core products with the right balance of promotion, media and innovation. During the first quarter, we began rebalancing our marketing features to drive our core and the initial sell-through results were positive. As we look to the second half, we are on track to launch our next big innovation directly into our core. And the third initiative is to drive online growth. As the migration to online accelerates, we are reallocating our personnel and marketing resources to capture this consumer shift. In the first quarter, our U.S. online sales across all channels increased 15% over last year and now represent 8% of our domestic sales.”
Near the end of the conference call, CEO Noll revealed some weakness in the “intimates” category, which is contained within the company’s Innerwear segment. “Our intimates business was down in the quarter and it’s really affected by a higher concentration of sales. Roughly 40% of that business is in that mass and our net mid-tier and department store channel. So, it was down modestly in the quarter. What – on the Innerwear or the basics business on the other side was up and it benefited from both the stronger trends in mass where the predominance of that business is sold as well as the early efforts we had to refocus on the core.”
A complete transcript of the conference call can be found here: http://seekingalpha.com/article/3966912-hanesbrands-hbi-ceo-rich-noll-q1-2016-results-earnings-call-transcript
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