Hosiery contributes $1 mn despite sales decline - Hanesbrands
Hanesbrands Inc. reported that first-quarter 2010 net sales increased 8.2 percent and diluted earnings per share increased to $0.37 from a loss of $0.20 a year ago.
The strong earnings growth was primarily a result of increased sales (which contributed $0.17 of EPS growth), improved operating margin ($0.25 of growth), and lower restructuring ($0.15 of growth).
Net sales increased by $70 million to $927.8 million with every business segment except Hosiery reporting sales growth. Net sales in the year-ago quarter were $857.8 million.
The company's significant retail shelf-space gains contributed approximately 6 percentage points of sales growth, while approximately 2 percentage points of growth was driven by increased retail sell through, retailer inventory restocking, and foreign currency exchange rates.
“We are off to a strong start to 2010 as a result of our investment in our brands and in our supply chain during the recession,” Hanesbrands Chairman and Chief Executive Officer Richard A. Noll said. “Our brands are stronger than ever, gaining significant retail shelf space across all channels of trade. We expect to maintain this momentum throughout 2010.”
Based on the strong performance in the quarter, Hanesbrands is revising its 2010 guidance for net sales and is raising its 2010 EPS guidance. For the year, net sales are expected to increase by 6 percent to 8 percent, and EPS is expected to be in the range of $2.15 to $2.27.
Business Segment Summary and Highlights
Of the $70 million in sales growth in the first quarter, the Innerwear segment contributed $33 million, Outerwear contributed $24 million, Direct to Consumer accounted for $3 million and International contributed $15 million, with those gains slightly offset by the $5 million combined decline in the Hosiery and Other segments.
The business segments generated $46 million of increased operating profit in the quarter. The Innerwear segment contributed $28 million of the increase, Outerwear contributed $19 million, Hosiery contributed $1 million despite a sales decline, and International added $2 million. The Direct to Consumer segment had $4 million lower operating profit than a year ago.
Key business segment highlights include:
• Innerwear sales were driven by increases in all product categories, with double-digit sales growth of male underwear. Retail sell-through rates were slightly above expectations throughout the quarter. The segment had strong operating profit growth even with a $6 million increase in media and other marketing investment in the quarter.
• The first quarter is the seasonal low quarter for Outerwear, but the segment produced 11 percent sales growth and a $19 million increase in operating profit. The company's Just My Size brand of plus-size apparel drove retail casualwear sales growth of nearly 50 percent, while retail activewear and wholesale casualwear both delivered mid-single-digit sales gains.