Hanesbrands Inc reported its third consecutive quarter of strong growth with third-quarter 2010 net sales increasing 10.8 percent and diluted earnings per share increasing 47 percent to $0.63, up from $0.43 a year ago.
Earnings growth in the quarter was propelled by the third consecutive quarter of accelerated sales growth and lower restructuring, which overcame a higher income tax rate. Strong sales growth in the company's three largest business segments - Innerwear, Outerwear and International - drove a net sales increase of $115 million to $1.17 billion. Net sales in the year-ago quarter were $1.06 billion.
Based on performance in the first three quarters and the pending Gear For Sports acquisition, Hanesbrands updated its 2010 guidance. Full-year net sales are expected to be approximately $4.3 billion, an increase of more than 10 percent over last year's net sales of $3.9 billion. Full-year EPS is expected to be in the range of $2.27 to $2.32, more than four times last year's EPS of $0.54. The company's previous guidance for 2010 was a range of $2.25 to $2.35.
"We are pleased with delivering continued strong growth in 2010," Hanesbrands Chairman and Chief Executive Officer Richard A. Noll said. "Our brands are performing well with consumers and delivering results for our customers. We are well positioned to capitalize on our momentum and our growth platform as we prepare for 2011. We are poised to continue our success through the strength of our brands, additional new programs, our ability to price our products in an inflationary environment, and the addition of our pending Gear For Sports acquisition.
Business Segment Summary and Highlights The company's significant retail shelf-space gains for 2010 and solid back-to-school sales results were the foundation for the quarter's sales growth. New programs and shelf-space gains contributed approximately 7 percentage points of the quarter's 10.8 percent sales growth. The remaining growth came from increased retail sell through, retailer inventory restocking, and favorable foreign currency exchange rates in the quarter.
Double-digit sales increases in the Innerwear, Outerwear and International segments combined for $122 million in sales growth. Direct to Consumer sales were up slightly, and sales in the Hosiery and Other segments declined by $7 million combined.
Key business segment highlights include: Innerwear sales increased by nearly 10 percent, driven by strong results for male underwear and intimate apparel. The segment achieved growth with mass, mid-tier, department store and dollar-store retail customers. Men's underwear, which continues to make significant share gains, recorded its third consecutive quarter of strong double-digit sales growth. Segment operating profit increased by 2 percent in spite of higher input costs, including cotton, and higher distribution costs. Across-the-board growth in the Outerwear segment, led by the Champion,Just My Size and Hanes brands, resulted in a 19 percent sales increase for the quarter.
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