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Sales remain unchanged at Hanesbrands in Q3
31
Oct '08
Hanesbrands Inc., a leading marketer of innerwear, outerwear and hosiery apparel, today reported results for the 2008 third quarter.

Total net sales in the quarter were unchanged at $1.15 billion. Earnings per diluted share in the quarter were $0.17. Excluding actions and the previously announced impact of a retailer bankruptcy, non-GAAP earnings per diluted share increased by 17 percent to $0.56 as a result of reduced long-term debt, lower base interest rates, and lower income tax expense as a result of the company's global supply chain strategy.

"We continued our strategic execution in the third quarter and delivered comparable sales and solid earnings per share in a difficult environment," Hanesbrands Chief Executive Officer Richard A. Noll said. "We remain optimistic about our earnings potential for the fourth quarter due to favorability of expenses that may more than offset the challenges of higher commodity costs and an uncertain sales environment."

Noteworthy Financial Highlights:
Total net sales in the quarter held steady at $1.15 billion, increasing slightly. Sales increases in the innerwear and international segments were offset primarily by declines in the sheer hosiery segment and the other segment. The 2 percent sales increase in the innerwear segment was driven by strong Hanes male underwear sales.

In the outerwear segment, Champion activewear sales increased by double-digits. Total net sales for the nine-month period were down 3.1 percent to $3.21 billion. GAAP earnings per diluted share in the quarter decreased by $0.23 to $0.17. This includes a $0.35 reduction per diluted share for restructuring and related charges and $0.04 per diluted share for the bankruptcy of Mervyn's, a regional retailer, which announced its liquidation plans after the end of the third quarter.

Excluding actions and the previously announced Mervyn's bankruptcy impact, non-GAAP diluted EPS increased by $0.08 to $0.56. Excluding actions only, non-GAAP diluted EPS increased by $0.04 to $0.52. For the nine-month period, non-GAAP diluted EPS, excluding actions, increased by 23 percent to $1.59.

GAAP operating profit in the quarter was $58.2 million, down $47.5 million. Non-GAAP operating profit, which excludes actions, declined by $13.1 million in the quarter. The company was able to substantially offset significant increases of $12 million of higher cotton costs and $7 million of oil-related costs through continued benefits of cost-saving initiatives. SG&A cost increases included $5.5 million of bad debt expense due to the Mervyn's bankruptcy.

Non-GAAP operating profit margin excluding actions and the Mervyn's impact was 9.3 percent in the quarter versus 10.0 percent a year ago.

(Diluted EPS excluding actions, operating profit excluding actions, operating profit margin excluding actions and SG&A excluding actions are non-GAAP measures used to better assess underlying business performance because they exclude the effect of unusual actions that are not directly related to operations.

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