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The multiyear growth initiative aims to increase investment for growth, reduce costs, and drive cash flow. It is expected to drive the company's Sell More, Spend Less, Generate Cash business strategy. By 2020, the effort is expected to generate approximately $300 million of incremental annual net cash from operations and $100 million in annualised net cost savings after annualised growth reinvestment of $50 million.
Incremental growth efforts will focus on leveraging the company's global Champion activewear business, increasing global online and omnichannel sales, and investing in brand building. The project launched in the first quarter and is expected to be neutral to full-year operating results in 2017, while providing significant benefits in coming years.
"We are off to the strong start of 2017 that we sought. We had one of our best first quarters for cash flow as we executed a disciplined working capital plan. Acquisitions, our Champion brand and online sales are contributing to growth as we weather expected challenges in the retail environment. In addition, we are pleased to launch Project Booster, which we believe provides a clear roadmap to accelerating growth and value creation," said Gerald W. Evans Jr, Hanes chief executive officer.
On a GAAP basis for continuing operations, first-quarter operating profit of $121 million decreased 1 per cent and EPS of $0.19 decreased 10 per cent. When excluding pretax charges related to acquisition integrations, adjusted operating profit of $160 million increased 9 per cent and adjusted EPS of $0.29 increased 12 per cent.
Net cash from operations improved by $262 million in the first quarter compared with a year ago – a use of cash of $23 million this year versus a use of $285 million a year ago.
For 2017, the company continues to expect net sales of $6.45 billion to $6.55 billion, GAAP operating profit of $845 million to $895 million, adjusted operating profit excluding actions of $935 million to $975 million, GAAP EPS for continuing operations of $1.70 to $1.82, adjusted EPS excluding actions for continuing operations of $1.93 to $2.03, and record net cash from operations of $625 million to $725 million.
Compared with 2016 results, the midpoint of 2017 guidance represents net sales growth of 8 per cent, GAAP operating profit growth of 12 per cent, adjusted operating profit growth of 5 per cent, GAAP EPS growth from continuing operations of 26 per cent, adjusted EPS growth from continuing operations of 7 per cent, and operating cash flow growth of 11 per cent. (KD)
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