Double digit increases in its three major segments Innerwear, Outerwear and International drove Hanesbrands Inc. to post widespread improvement over a year-ago period that suffered from restructuring costs and declining sales.
Management for the Winston-Salem, NC-based parent of Champion and Duolfold said earnings for the second quarter ended July 3 nearly tripled on improved sales, better margins and the absence of the aforementioned restructuring costs last year.
“Our brands are performing well with consumers, helping drive share gains in core categories and delivering strong productivity for the new sales programs we secured for this year,” said Chairman & CEO Richard Noll.
Total sales for Hanesbrands increased 9.1% to $1.08 billion from $986.0 million a year ago. As noted, the company recorded growth in all three of its major segments, accounting for a combined sales growth of $103 million, which was partially offset by a $14 million drop in the Hosiery and Other segments. Direct-to-consumer sales were “up slightly.”
In addition to the 10.0% surge Hanesbrands reported from its Innerwear segment, management cited “across-the-board” growth in the Outerwear segment, where sales increased 16.1%.
Segment operating profit doubled over easy year-ago comparisons. Retail casualwear sales more than doubled, fueled by growth of the company’s “Just My Size” brand of plus-size apparel, while retail activewear and wholesale casualwear had mid-single-digit sales gains.
Among other results, earning for Hanesbrands nearly tripled, as the company recorded a net income of $85.4 million, or 87 cents per diluted share, from a net income of $30.6 million, or 32 cents per diluted share, a year ago. Gross margins for the quarter improved 160 basis points to 34.8% of sales.
Because of better-than-expected quarter end results, management for Hanesbrands confirmed it would raise 2010 net sales guidance to between 8% and 10% growth, up from the originally estimate of 6% to 8% growth. Management said it was raising guidance due to “additional new sales programs for the second half of the year, higher than expected productivity of new programs from previously announced shelf-space gains, and expectations of a continued overall increase in consumer spending and retailer inventory restocking.”
2010 EPS guidance is expected to be in the range of $2.25 and $2.35, up from previous guidance of between $2.15 and $2.27. Operating margin improvement for the year is expected to be at “the high end” of the company’s previously stated goal of 50 to 100 basis points.
