HanesBrands First-Quarter Financial Results Show Growth In All Segments
HanesBrands, Inc.’s first-quarter 2021 results report continued sales momentum across its global innerwear and activewear businesses driving strong adjusted operating profit and cash flow. Net sales for the first quarter, which ended April 3, totaled $1.51 billion, an increase of 25 percent compared with $1.2 billion in first quarter 2020. Winston-Salem, North Carolina-based HanesBrands participates in the promotional products industry as suppliers Hanes/Champion/ComfortWash (PPAI 191138, S10) and Alternative Apparel (PPAI 217134, S5).
The company says that double-digit growth in both global innerwear and activewear businesses was driven by strong point-of-sale performance across all major channels, led by 82-percent growth in online channels, and market share gains in key categories. First-quarter sales growth also benefited from a comparison with the initial pandemic shutdowns in the year-ago period and certain one-time contributions, including government stimulus and retailer restocking.
“Our strong first-quarter results showed growth across all business segments,” says CEO Steve Bratspies. “Champion continued its rapid growth, driven by strong consumer demand. We gained share in U.S. Innerwear, and our Hanes Total Support Pouch launch shows how our brands can appeal to younger consumers with a combination of innovative products and compelling marketing. Our global online sales grew more than 80 percent as we focus on empowering consumers to shop when, where and how they want to shop.”
Bratspies adds, “I want to thank our 61,000 associates who continue to meet consumer demand around the world as we continue to face COVID-related challenges. Our first-quarter results show the competitive advantages of our supply chain as well as the rapid progress we’re making on our Full Potential plan to generate long-term revenue and profit growth.”
First-quarter GAAP gross margin of 40 percent increased 520 basis points compared to the prior-year period. Adjusted gross margin of 40.2 percent increased 360 basis points over first quarter 2020. The year-over-year improvement in gross margin was driven predominantly by the leverage of higher sales volume from strong point-of-sale growth and its decision to discontinue operations of its European Innerwear business. The company has announced its intention to seek strategic alternatives for its the business as it focuses on other strategic growth opportunities.
Also contributing to gross margin improvement in the quarter were favorable product mix, foreign exchange rates and a modest benefit from sales related to the company’s SKU reduction initiative. These were partially offset by higher transportation costs, which resulted from increased shipping rates globally as well as costs associated with expediting product to meet stronger-than-expected customer demand.
HanesBrands also reports that its first-quarter GAAP operating profit increased 297 percent to $190 million from $48 million in the comparable prior-year period. GAAP operating margin of 12.6 percent increased 860 basis points over prior year. Adjusted operating profit, which excludes $19 million of charges related to the Full Potential plan, increased 190 percent to $210 million from $72 million in the prior-year period. Adjusted operating margin increased 790 basis points over the prior year to 13.9 percent. The company says that the strong improvement in operating margin was driven by gross margin performance as well as SG&A leverage from higher sales, which more than offset increased investments in brand marketing in the quarter.
First-quarter GAAP income from continuing operations totaled $128 million, or $0.37 per diluted share, compared to income from continuing operations of $5 million, or $0.01 per diluted share, in first quarter 2020. Adjusted income from continuing operations excluding after-tax charges totaled $136 million, or $0.39 per diluted share, compared to adjusted income from continuing operations of $26 million, or $0.07 per diluted share in the prior-year period.