(Filed Under Financial and General Interest News). Hanesbrands Innerwear segment sales fell 4.1% in the quarter ended December 28, 2019, while the division’s operating profit rose 4.7%. For the full year, sales were down 3.2% and operating profit was down 2.1%.
Within the Innerwear segment, sales of “basics decreased 5% as a result of earlier-than-planned disruption from ongoing store resets in the mass channel that are expected to generate increased space and share beginning in the second half of 2020.” The company added that “Sales of Innerwear intimates decreased 2%, which was sequentially better than the third quarter and consistent with expectations. Bra revenue increased slightly and contributed significantly to segment operating margin expansion. Successful market performance of the EasyLite and DreamWire bra innovations are contributing to revitalization efforts.”
Overall, Innerwear “operating profit margin of 24.6% increased 210 basis points, benefiting from increased pricing and lower selling, general and administrative expenses.”
Hanes explained that while it has exited “its C9 Champion business in the mass retail channel and its DKNY license for intimate apparel, the company expects continued growth in 2020 for its underlying business.”
Looking at 2020, Hanes stated “U.S. Innerwear net sales are expected to decrease by approximately 1.5% to 3.5% for the full year and approximately 5.5% to 7.5% for the first quarter as result of the C9 Champion and DKNY program exits, retailer door closures and higher year-ago shipments for a new sock program. When 2019 is rebased for the program exits, full-year net sales for the segment are expected to range from -1% to +1% and first-quarter net sales are expected to decline approximately 3% to 6%.”
“The company expects an improving sales trend for U.S. Innerwear through the year as store resets in the mass channel for Innerwear basics start to yield benefits and the Innerwear intimates revitalization progresses, particularly in bras. The company believes that supply chain restructuring initiatives are stabilizing segment profitability with operating profit margins expected to increase for the full year on a reported and rebased basis.”
In the fourth quarter, Innerwear segment sales totaled $569,630,000 compared to $594,177,000 in the quarter ended December 29, 2018. Segment operating profit was up to $140,368,000 compared to $134,039,000 the year before. For all of 2019, Innerwear segment sales were $2,302,632,000 compared to $2,379,675,000 in 2018, while segment operating profit was $515,991,000 compared to $526,831,000 in 2018.
For Hanes as a whole, which includes a variety of apparel in its Activewear, International and Other segments, net income in 2019 was $600,720,000 on sales of $6,966,923,000 compared to net income of $539,666,000 on sales of $6,803,955,000. — NM
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