Sales, Profits Up In HanesBrands’ Q1 Financials
HanesBrands has issued its first-quarter 2019 financial results, noting that the Winston-Salem, North Carolina-headquartered company exceeded its guidance, including net sales growth of eight percent; operating profit growth and reduced debt leverage. In the quarter, which ended March 30, net sales grew to $1.59 billion, fueled by strong U.S. activewear growth, broad-based international growth and increased sales of U.S. innerwear basics. Globally, strong Champion sales growth accelerated. Hanesbrands participates in the promotional products industry as suppliers Hanes/Champion/ComfortWash (PPAI 191138) and Alternative Apparel (PPAI 217134).
The company’s GAAP operating profit in the first quarter increased one percent to $148 million, while adjusted operating profit increased two percent to $169 million. GAAP diluted earnings per share in the quarter were $0.22, the same as a year ago, and adjusted EPS increased 4 percent to $0.27.
“We are delighted to continue our business momentum with a very strong first quarter,” says Hanes Chief Executive Officer Gerald W. Evans, Jr. “We are generating broad-based growth across businesses and geographies. Our brands are strong, and growth-related investment is delivering results. In addition to the acceleration of Champion growth globally, innerwear sales increased in Asia, Australia and the Americas, and sales of U.S. innerwear basics increased for the second consecutive quarter.
“Our cash generation is on plan, our debt leverage is coming down, and our diversified business portfolio is paying dividends. We feel confident in achieving our long-term goals and enhancing value creation with our business model.”
HanesBrands’ organic sales in constant currency increased in the quarter by 10 percent, the seventh consecutive quarter of constant-currency organic growth. This growth rate is up from the six percent growth rate in the fourth-quarter 2018. First-quarter sales for the innerwear, activewear and international segments all exceeded company expectations. Growth initiatives drove a 75 percent increase in constant-currency global Champion sales outside the mass channel with strong double-digit increases in all regions. Contributors included U.S. expansion across retail and online channels; strong wholesale expansion in northern and western Europe; strong wholesale and consumer-direct growth in Asia, including continued store openings in China and elsewhere; and distribution expansion beginning in Australia.
Total company consumer-direct sales, which is defined as brand retail stores and all online business, increased 16 percent in the first quarter. Ecommerce sales increased for each of the innerwear, activewear and international segments. The company incurred an unexpected bad debt charge of $4 million in the first quarter related to the insolvency of Heritage Sportswear. The charge affected both GAAP and adjusted operating profit and lowered GAAP and adjusted EPS by approximately $0.01.