Q2FY16 GAAP operating profit tanks 33% at HanesBrands

01 Aug '15
3 min read

GAAP operating profit tanked 33 per cent to $139 million and EPS drove down 39 per cent to $0.23, both down from a year ago periods, at apparel marketer HanesBrands in the three months to July 4, 2015

While, adjusted operating profit excluding actions increased 15 per cent to $265 million and adjusted EPS excluding actions surged 16 per cent to $0.50 in the same comparative periods.

“However, acquisitions pushed up net sales 13 per cent year over year to $1.52 billion in the second quarter of fiscal 2016,” Hanes said in a press release.

“Sales growth was driven by Activewear and acquisitions of DBApparel and Knights Apparel and results were driven by acquisition benefits, global supply chain performance and margin expansion,” it explained.

Net sales in the quarter excluding foreign currency fluctuations and the acquisitions of DBApparel and Knights Apparel rose by just 1 per cent.

Activewear net sales soared 19 per cent in the reporting quarter, driven by high-single-digit growth of Champion as well as $37 million in net sales from Knights Apparel, which was acquired April 6, 2015.

In the international segment, DBApparel, that was acquired August 29, 2014, contributed net sales of €149 million as against €134 million in the prior fiscal second quarter.

Its adjusted operating profit margin increased 20 basis points in the quarter under review to 17.4 per cent, while that of Innerwear and Activewear grew by 190 basis points and 130 basis points, respectively.

“Contributors included strong supply chain performance, Innovate-to-Elevate benefits, and performance associated with the previous acquisitions of Gear for Sports and Maidenform,” it informed.

“We continue to deliver double-digit growth in adjusted operating profit and EPS as expected, and we are tracking to our full-year profit expectations,” Hanes chairman Richard Noll said.

“The integrations of our DBApparel and Knights Apparel acquisitions are proceeding on plan, and we continue to reap benefits from the past acquisitions of Gear for Sports and Maidenform,” he added.

According to Hanes, the DBApparel integration planning continues to progress on schedule with implementation to begin in the fourth quarter, subject to pending consultations with works councils and unions.

The integration plan for Knights Apparel has been designed and communicated to employees, with implementation beginning late in the fourth quarter of 2015.

For full fiscal 2016, Hanes now expects net sales of slightly less than $5.9 billion, expects adjusted operating profit of $855 million to $875 million, and continues to expect adjusted EPS of $1.61 to $1.66.

The company's fiscal 2016 guidance represents growth over fiscal 2015 results of nearly 11 per cent for net sales, 12-15 per cent for adjusted operating profit, and 13-17 per cent for adjusted EPS. (AR)

Fibre2Fashion News Desk – India

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