Hanesbrands Inc reported results for the 2008 second quarter. Earnings increased in the quarter as a result of continued strategic execution, while sales declined, reflective of the challenging retail sales environment for apparel and later timing of back-to-school shipments.
Earnings per diluted share in the quarter more than doubled to $0.60. Excluding actions, non-GAAP earnings per diluted share increased by 20 percent to $0.65, up $0.11 as a result of reduced long-term debt, lower base interest rates, and lower income tax expense as a result of the company's global supply chain strategy. Total net sales decreased by 4.4 percent to $1.07 billion.
"We are pleased with continued earnings per share growth as a result of executing our improvement strategies, despite operating in a tough economic environment," Hanesbrands Chief Executive Officer Richard A. Noll said. "Most of our business improvement initiatives are working, but we are continuing to address sales declines, which were primarily centered around intimate apparel product categories."
Noteworthy Financial Highlights
Selected highlights for the quarter and six months ended June 28, 2008, compared with the year-ago periods ended June 30, 2007, include:
-- Earnings per diluted share in the quarter increased by 131 percent to $0.60, up from $0.26 a year ago. Diluted EPS for the six-month period increased by 149 percent to $0.97.
-- Operating profit in the quarter increased by 28 percent to $113.1 million and increased by 28 percent to $200.9 million in the six-month period.
-- Total net sales in the quarter decreased by $50 million to $1.07 billion. Sales primarily decreased in the company's innerwear segment, with particularly soft sales for intimate apparel product categories. Later back-to-school shipments compared with a year ago also contributed to the innerwear decline.
International segment sales increased by 20 percent in the quarter as a result of favorable foreign currency exchange rates and growth. The increase in international sales more than offset sales declines in the outerwear segment, the hosiery segment and the other segment.
"We are focused on driving a great execution of back-to-school and year-end holiday sales programs," Noll said. "We are confident that our brand investment, product development, and customer programs are the best approach to competing in the current retail climate."
Since the company's spin off, Hanesbrands has strategically structured its debt and managed its exposure to interest rates, and the company benefited from these efforts in the first half of 2008. As part of this ongoing strategic effort, the company earlier this month took advantage of an opportunity to fix the interest rate on $500 million of floating-rate bonds for four years at 7.64 percent. Of the company's approximate $2.3 billion in debt, $1 billion is at fixed rates.