Hanesbrands Inc. reported that total net sales in the second quarter declined by 8% to $986.0 million, while GAAP earnings per diluted share were 32 cents per share compared with 60 cents per share in the year-ago second quarter. Excluding restructuring and other actions, which totaled $12.5 million, non-GAAP earnings per diluted share in the second quarter were 42 cents per share as compared with 65 cents per share a year ago.
Margins for the second quarter declined by 220 basis points to 33.2% as compared to 35.5% in Q2 last year. Management said margins were protected by cost-cutting efforts that included cutting jobs, tightening inventory and focusing on paying down debt.
In a conference call with analysts, management for the Winston-Salem-based company said declines in sales improved for three of the four major segments. The Outerwear segment, which consists of the Champion brand, saw losses for the second quarter improve sequentially to a 7.9% decline — significantly narrower than the 21% declines the company reported in the first quarter. Specifically, the Champion brand reported double-digit growth in the quarter. Management said they expect outerwear sales to improve to mid-single-digit declines though the third quarter.
In the International segment, sales declined 20% – but only 11% in constant currency-with most of the business coming from Europe. Revenues for the hosiery business fell 14.4% and Innerwear sales declined 3.8% from last years second quarter.
Cotton costs for Q2 were 49 cents per pound and claimed roughly a $9 million positive impact. The third quarter is expected to reflect 49 cents per pound approximately a $12 million positive impact.
On the conference call, CEO Rich Noll said the company could see single-digit sales declines continue, but noted that he hopes to see flat sales for the remainder of Q2. The outlook will become clearer following the back-to-school season, he said.
