Hanesbrands reports Q1 loss, to lay off 250 jobs
Mr. Richard A. Noll, Chairman and CEO
Hanesbrands Inc., a leading marketer of innerwear, outerwear and hosiery apparel, reported first-quarter 2009 results.
Earnings per diluted share in the quarter decreased to a loss of $0.20. Excluding actions, non-GAAP earnings per diluted share were $0.03, down $0.39 from a year ago amid tight cost control but lower sales. Total net sales decreased by 13 percent to $857.8 million, as expected due to conditions in the retail marketplace.
“Our overall results were in line with our expectations and were significantly impacted by the economic recession,” Hanesbrands Chairman and Chief Executive Officer Richard A. Noll said.“Sales declined in the quarter at a rate consistent with what we had communicated to investors, and we tightly controlled expenses to mitigate the impact of reduced consumer spending. The second quarter looks as if both the sales and operating profit rate of decline could improve.”
Noteworthy Financial Highlights
Selected highlights for the quarter ended April 4, 2009, compared with the year-ago quarter ended March 29, 2008, include:
Earnings per diluted share in the quarter swung to a loss of $0.20, from a profit of $0.38 a year ago. Non-GAAP diluted EPS, which excludes actions, decreased to $0.03, from $0.42 a share a year ago. Total net sales in the quarter decreased by $130 million to $857.8 million, from $987.8 million a year-ago. Sales declined in each segment, with a single-digit decline in the Innerwear segment and double-digit declines in the Outerwear, International and Hosiery segments.
In the first quarter, the Innerwear sales decline of 6 percent was less severe than the 11 percent decline in the fourth quarter 2008. As expected, the Outerwear sales decline of 21 percent was more severe than the 8 percent decline in the fourth quarter, primarily due to lower casualwear sales in the retail and wholesale channels. Based on advanced booked sales, the company expects improvement in the sales decline rate for the Outerwear segment to a decline in the mid-single digits in the third quarter.
Hosiery products continue to be more adversely impacted by reduced consumer discretionary spending than other apparel categories. Hosiery segment sales declined by 21 percent in the first quarter, similar to the decline in the fourth quarter. The decline in International segment sales accelerated from 9 percent in the fourth quarter to 21 percent as the impact of the recession intensified overseas and the dollar strengthened against foreign currencies.
“Retailers are still experiencing soft sell-through but are beginning to loosen inventory constraints,” Noll said. “We have secured or are in the process of securing an incremental $75 million to $90 million of promotional and new-product programs that will ship in the second through fourth quarters. Given all of this, we may see improvements in the second-quarter sales rate with total sales potentially declining in the single digits. For the full year, the sales scenarios that we depicted in our February investor day meeting still remain intact.” GAAP operating profit was $16.0 million in the quarter, compared with $87.8 million a year ago. The quarter included $24.4 million in restructuring and related charges.