HanesBrands Reports Sales Growth In Second Quarter 2018
For the second quarter of 2018 ended June 30, HanesBrands reports net sales growth of four percent to $1.72 billion, in line with a corporate guidance range of $1.7 to $1.725 billion. Organic sales in constant currency, which exclude acquisition contributions, increased slightly. HanesBrands participates in the promotional products industry as supplier Hanes/Champion (PPAI 191138).
The Winston-Salem, North Carolina-headquartered company’s GAAP operating profit of $220 million and adjusted operating profit of $245 million each decreased six percent, the midpoint of guidance for each. GAAP diluted earnings per share (EPS) for continuing operations was $0.39 compared with guidance of $0.38 to $0.40, and adjusted EPS excluding actions was $0.45, compared with guidance of $0.44 to $0.46. GAAP EPS and adjusted EPS decreased 17 percent and 15 percent, respectively, reflecting lower operating profit and a higher corporate tax rate for 2018 as a result of U.S. tax reform and higher interest expense.
Hanes has reiterated its full-year guidance and issued net sales, operating profit and EPS guidance for the third-quarter 2018.
“Our results for the second quarter were consistent with our guidance and the year is unfolding as we expected,” says Hanes CEO Gerald W. Evans Jr. “We achieved organic growth for the fourth consecutive quarter with strong international and global Champion sales growth. We continue to address the challenging environment for intimate apparel and expect our turn-around plan to gain additional traction by the end of the year. Our cash flow from operations of $64 million in the second quarter was ahead of our expectations and the outlook is strong. We continue to expect margin expansion in the second half, primarily driven by additional acquisition synergies and organic sales growth.”
Contributors to the company’s net sales growth in the quarter included acquisition contributions, widespread global Champion strength, and increased consumer-directed sales. Champion sales increased in all geographies. Global Champion sales increased 18 percent in the quarter and were up 16 percent in constant currency. Growth of Champion fueled HanesBrands’ U.S. activewear segment’s sales increase of seven percent, including a 1.5 percent increase in organic sales. Segment operating profit decreased three percent due to higher raw material costs, start-up manufacturing inefficiencies and temporary distribution costs.
The company continues to expect full-year 2018 net sales of $6.72 billion to $6.82 billion, GAAP operating profit of $870 million to $905 million, adjusted operating profit excluding actions of $950 million to $985 million, GAAP EPS of $1.54 to $1.62, adjusted EPS excluding actions of $1.72 to $1.80, and net cash from operations of $675 million to $750 million.