For the quarter ended June 29, 2013, net sales increased 2 percent to $1.2 billion, operating profit increased 51 percent to $181.4 million, and diluted earnings per share increased 78 percent to $1.19 from $0.67 a year ago.
The company’s Innovate-to-Elevate platforms, which integrate the strengths of the company’s iconic brands, low-cost supply chain and product innovation, continue to help drive results, while the year-ago quarter had substantially higher cotton costs.
While the sales increase reflected a soft retail sales environment, gross and operating margins were strong, each up by approximately 500 basis points. Operating margins increased in each of the company’s four business segments with Activewear achieving record double-digit margins for the second quarter and the first half.
Based on year-to-date results and the economic environment, Hanes has increased its 2013 guidance for EPS, operating profit and free cash flow, while slightly lowering expectations for sales. The company’s new full-year guidance anticipates net sales of approximately $4.55 billion; operating profit of $550 million to $575 million; EPS of $3.50 to $3.65; and free cash flow of $450 million to $550 million.
“We achieved record profit margins and EPS in the second quarter with each business segment achieving improved profitability,” Hanes Chairman and CEO Richard A. Noll said. “Our Innovate-to-Elevate platforms continue to excel and are quickly delivering results for us and our retail partners. We are on solid footing to continue to deliver value for consumers, retailers and investors. We have moved into the low end of our target range for sustained operating profitability sooner than anticipated, and our cash flow and solid balance sheet have allowed us to begin paying quarterly dividends and agree to acquire Maidenform Brands.”
Second-Quarter and First-Half 2013 Financial Highlights and Business Segment Summary
Key accomplishments for the second quarter and first half include:
- Innovate-to-Elevate Platforms Driving New-Product Success. The company’s Innovate-to-Elevate product platforms continue to perform well. In particular, Hanes Comfort Blend and X-Temp underwear and socks are driving strong growth in Innerwear basics, and Smart Size bras are performing well across brands in Innerwear intimate apparel.
- Strong Second-Quarter and First-Half Operating Margin. The company achieved record profitability in the second quarter with an operating margin of 15.1 percent, up 490 basis points over the prior-year quarter. Operating margins increased in each business segment in the second quarter. For the first half, the company’s 12.4 percent operating margin increased 630 basis points over the previous year’s first half.
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