'This year is playing out consistent with our expectations' – Mr Noll

30 Oct '09

5 min read

Hanesbrands Inc., one of the world's largest apparel essentials companies, reported results for the 2009 third quarter and announced expected net shelf-space gains for 2010.

The company increased earnings and profit margins in the third quarter and reduced debt.Third-quarter sales declined, in line with the company's stated expectations.

- Q3 EPS of $0.43, up 153 percent; EPS excluding actions of $0.63, up 21 percent.
- Q3 sales of $1.06 billion, down 8 percent.
- Year-to-date debt reduction of $134 million.
- 2010 incremental sales of approximately 5 percent expected from net shelf-space gains at retailers.

“Given that we are in the midst of a recession,we had very good profit growth in the quarter and solidified business momentum for 2010,” Hanesbrands Chairman and Chief Executive Officer Richard A. Noll said. “We have built a platform for future growth through our continued brand investments and low-cost global supply chain. We are protecting margins, reducing debt and substantially ramping up our production capacity to support a strong 2010, in which we expect shelf-space and distribution gains to add approximately 5 percent to our sales.”

Noteworthy Financial Highlights
Selected highlights for the quarter ended Oct. 3, 2009,compared with the year-ago quarter ended Sept. 27, 2008, include:
- Third-quarter sales were consistent with the company's previously announced expectations at $1.06 billion, compared with $1.15 billion a year ago. The company increased trade spending, especially for back-to-school programs, to support retailers and position the company for future growth opportunities.

- Sales for the Innerwear segment declined by 10 percent with weakness in intimate apparel and socks. Male underwear sales were comparable to last year. Outerwear segment sales decreased by 5 percent with sales strength to retailers, including increased Champion brand activewear sales, offset by lower sales to the wholesale channel.

- International segment sales decreased by 8 percent, and Hosiery segment sales declined by 12 percent. The company's sales planning assumption continues to be that consumer-spending levels remain constant through 2009.

- Operating profit was $93.3 million in the quarter, up from $58.2 million a year ago. Operating profit excluding actions increased by 9 percent to $111.1 million. The operating profit improvement resulted from cost-reduction initiatives and lower commodities.

- The third quarter's operating profit margin excluding actions was 10.5 percent, compared with 8.9 percent in last year's third quarter.

- Diluted EPS increased to $0.43 from $0.17, while diluted EPS excluding actions increased by 21 percent to $0.63 from $0.52 a year ago.

- EPS benefited from higher operating profit and a lower effective income tax rate. The effective income tax rate was 14 percent in the quarter, down from a rate of 24 percent in last year's quarter. The company expects the tax rate for the year to be 16 percent, reflecting a higher mix of foreign profit due in part to domestic restructuring charges.

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