Hanesbrands, Inc., which owns Champion and Duofold, said that despite the affects of the recession, the company continually invested in its brands as well as the companys supply chain.  Hindsight shows that the aggressive moves have paid off as HBI claims its brands are now stronger than ever. 

 

Rich Noll, HBI chairman and CEO, said that while consumers are still value conscious, the company is also seeing a consumer willingness to trade up products and channels. Due to consistent increases in consumer spending across all categories in the U.S., domestic retailers seem increasingly optimistic and are raising both inventory and pre-booked order levels.

 

HBI reported an 8.2% increase in net sales at $927.8 million in the first quarter, compared to $857.8 million in the year-ago period. We expect to maintain this momentum throughout 2010, said Noll.  Significant retail shelf-space gains contributed approximately six percentage points of sales growth. 

 

HBI reported diluted earnings per share of 37 cents in the first quarter as compared to a loss of 20 cents in the 2009 period.  Gross profit was up 27% to $327.4 million while the companys percentage of net sales followed suit, up over 500 bps from the 30.1% reported in 2009. 

 

Attributing the success in the first quarter to increased sales, Hanesbrands saw a 790 basis point improvement in operating margins to 9.2% of sales in Q1. 

 

Of the $70 million in sales growth, Innerwear and Outerwear accounted for $33 million and $24 million, respectively. 

 

After investing $6 million in media and marketing the innerwear segment, which includes the Duofold brand as well as the bra and underwear businesses, produced double-digit increases in the first quarter. 

 

In similar fashion, outerwear reached unseasonably high sales growth at 11% and a $19 million increase in operating profit.  Active and casual wear delivered mid-single digit sales gains while the companys Just My Size brand of plus-size apparel provided 50% sales growth. 

 

Management said that cotton had a positive $13 million impact as costs for the first quarter were 52 cents per pound.  HBI forecasts cotton costs for the full year of 2010 should average 69 cents, compared to 55 cents in 2009, or up $34 million in total.

 

HBI opened 20 Champion stores in 2009 and is currently starting to increase the footprint on some of the stores from 5,000 to 10,000 or more square feet.