HBI reported that sales decreased 13.2% to $857.8 million in the first quarter from $987.8 million in the year-ago period. The company posted a net loss, including restructuring charges, of $19.3 million, or 20 cents a share, in the period, compared to net income of $36.0 million, or 38 cents per share, in the year-ago quarter. Excluding the charges, net income was $3.0 million, or 4 cents a share. Gross margins contracted 480 basis points to 30.1% of net sales in the quarter.
Restructuring charges amounted to $18.7 million in the latest period versus $2.6 million a year ago.
Sales in the Innerwear segment, which includes the Duofold brand as well as the bra and underwear businesses, declined 5.5% for the quarter to $513.8 million. The Outerwear business, which includes Champion, among other brands, saw revenues fall 21.0% to $214.9 million for the first quarter. The Innerwear sales decline was seen as less severe than the 11% decline in the fourth quarter 2008, while the Outerwear sales decline was more severe than the 8% decline in Q4, primarily due to “lower casualwear sales in the retail and wholesale channels.” Based on advanced booked sales, HBI expects the sales decline rate for the Outerwear segment to improve to a mid-single-digit decline in the third quarter.
On the supply chain side, the company has decided to start production Oct. 12, 2009 at its new Nanjing, China knit textile manufacturing plant. The plant is the company's first company-owned fabric manufacturing facility in Asia and will support the company's product sewing operations in Southeast Asia.
Management said that cotton costs had a negative $15 million impact in the first quarter, but should provide a $9 million positive impact in the second quarter, a $12 million positive impact in Q3 and an approximately $18 million positive impact in the fourth quarter.