HanesBrands Inc. said cold weather helped Champion pick up more shelf space in the first quarter as existing and new retailers sought to bring in more fleece.

 


Strong demand for fleece from existing and new doors drove double-digit growth in sales and operating profit at Champion and Hanesbrands’ Activewear segment. Segment sales increased 10.2 percent to $294.5 million and operating profit grew 50.1 percent to $32.0 million from the first quarter of 2013. Segment operating profit margins grew 290 basis points to 10.9 percent.

 

HBI said the segment’s branded print wear and Gear for Sports businesses also delivered strong sales and profit growth during the quarter. HBI’s Chief Operating Officer Gerald Evans said a resumption in sales to JCPenney and Target’s expansion into Canada will help buoy Champion’s growth through the back-to-school and holidays.

 

The strong outlook along with other positive news prompted HBI to raise its 2014 full-year financial guidance. It now expects adjusted operating profit of $665 million to $685 million, up $25 million; adjusted EPS of $4.80 to $5.00, up $0.20; and net cash from operating activities of $475 million to $575 million, up $25 million. The company continues to expect net sales for the year of slightly less than $5.1 billion.

 

HBI reported total net sales climbed 12 percent to $1.06 billion in the quarter.  Innerwear sales rose 14.9 percent to $571.1 million thanks to the acquisition of Maidenform Brands Inc. Direct-to-Consumer sales increased 4.5 percent to $83.7 million. International sales increased 8.7 percent to $110.0 million, but were up 19 percent currency neutral. 
Companywide gross margin declined 90 basis points to 33.7 percent. SG&A expenses increased 18.1 percent to $285.0 million, or 26.9 percent of net sales, up from 25.6 percent of sales in the quarter ended march 30, 2013. Operating profit declined 15.7 percent to $71.8 million, or 6.8 percent of net sales, compared with 9.0 percent of sales a year earlier. Net income after taxes declined 19.1 percent to $41.6 million.

 

However, HBI said that if not for non-recurring pretax charges of $43 million related to the acquisition and integration of Maidenform, supply chain optimization and a regional realignment of commercial operations, operating profits would have increased 34 percent to $114 million and adjusted earnings per share would have increased 49 percent to 76 cents per share.  That translated to an adjusted operating profit margin of 10.8 percent, which was a record for the first quarter. Adjusted SG&A margin dropped to 24.3 percent of net sales from 25.6 percent in the first quarter of 2013.