HanesBrands Releases Its First-Quarter Financial Results
HanesBrands has announced record first-quarter financial results for the third consecutive year. Reflecting a multiyear acquisition strategy and improvements to its core business operating margin, the company’s net sales increased one percent to $1.22 billion for the quarter ended April 2. HanesBrands, based in Winston Salem, North Carolina, participates in the promotional products industry as supplier Hanes/Champion (UPIC: HBIINC).
The company’s adjusted operating profit excluding actions increased 10 percent to $147 million in first quarter 2016 and adjusted EPS excluding actions increased 18 percent to $0.26. On a GAAP basis, operating profit increased 36 percent to $122 million and EPS increased 62 percent to $0.21. HanesBrands’ adjusted consolidated measures and comparisons exclude approximately $25 million of pretax charges in the first quarter of 2016 and $43 million of pretax charges in the first quarter of 2015, both related to acquisitions and other actions.
“We are off to a very good start and tracking to our plan to deliver another year of double-digit EPS growth,” says Hanes Chairman and Chief Executive Officer Richard A. Noll. “We remain focused on our previously announced sales initiatives, reaping acquisition synergies, expanding margins, and developing growth plans for our pending acquisition of Champion Europe.”
Among its acquisitions’ contributions, Knights Apparel, the collegiate licensed activewear business acquired in April 2015, performed well with sales of approximately $21 million in the quarter. The company also highlighted the synergy benefits it continues to receive from its acquisitions of Maidenform and Hanes Europe Innerwear.
The Knights Apparel’s acquisition also benefited HanesBrands’ activewear sales, which were up three percent in the quarter. The segment was negatively affected by the bankruptcy of a sporting goods retailer. The company’s innerwear sales increased one percent, while international sales for both it and activewear were down one percent due to unfavorable currency exchange rates.
For 2016, HanesBrands expects net sales of $5.8 billion to $5.9 billion; adjusted operating profit of $920 million to $950 million; adjusted EPS of $1.85 to $1.91; and record net cash from operations of $750 million to $850 million. This includes benefits from the acquisitions of Maidenform, Knights Apparel and Hanes Europe Innerwear, which are expected to add $40 million in synergies in 2016. However, it does not reflect the company’s planned acquisition of Champion Europe, which was announced on April 7 and is expected to close by the middle of the year.
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