Hanesbrands Inc., the parent of Champion and Duofold, reported sales in the third quarter were unchanged at $1.15 billion. Net earnings tumbled 59.1% to $15.9 million, or 17 cents a share, from $38.9 million, or 40 cents, a year ago, after charges tied to plant closings and the bankruptcy of Mervyn's.
Excluding actions and the Mervyns impact, earnings per diluted share increased 17% to 56 cents a share as a result of reduced long-term debt, lower base interest rates and lower income tax expense as a result of the companys global supply chain strategy. Non-GAAP operating profit, which excludes actions, declined by $13.1 million in the quarter.
The company was able to substantially offset significant increases of $12 million in higher cotton costs and $7 million in oil-related costs through continued benefits of cost-saving initiatives. SG&A cost increases included $5.5 million of bad debt expense due to the Mervyn's bankruptcy. The company expects 2008 full-year interest expense of approximately $155 million. In 2009, full-year interest expense is expected to decrease to a range of $140 million to $155 million.
In order to manage the supply chain transition in 2009, the company is on track to carry year-end inventory at the previously discussed $1.35 billion level.
The companys goal is to reduce inventory by $200 million over the next 18 months as it completes its knits supply chain transition.
