(Filed Under Financial and General Interest News). HanesBrands’ intimates business “increased 9% over last year” in its third quarter, according to Rich Noll, chairman and CEO. Meanwhile the company as a whole reported a 13.6% increase in sales and a 36.3% increase in profits for the period ending October 3.
The latest gains reverse declines reported for the second quarter, ended July 4, in which Hanes’ intimates sales were down along with overall company profits.
In a conference call to discuss the latest results, Noll noted its basics business “delivered strong results with sales up slightly in the quarter.” He added, “We also continued to see meaningful contributions from our acquisition strategy. Our Maidenform acquisition, it’s still paying dividend with the additional synergies contribution to core margin expansion in the quarter, while DBA and Knights Apparel continue to add nicely to earnings.”
A company release explained, “The April 2015 acquisition of Knights Apparel, a licensed apparel leader, added net sales of $84 million to activewear results in the third quarter. In the international segment, DBApparel, a leading marketer of intimate apparel and underwear in Europe that was acquired Aug. 29, 2014, contributed net sales of $179 million (€161 million) in the third quarter.”
For the three months ended October 3, 2015 the company reported a profit of $162.2 million on sales of $1.591 billion compared to $118.9 million on sales of $1.401 billion for the quarter ended September 27, 2014.
For the first nine months of this year, Hanes reported a lower profit of $309.7 million on sales of $4.322 billion compared to $315.1 million on sales of $3.802 billion during the same period in 2014.
Among the other highlights, the company stated, “Innerwear net sales increased 3 percent in the third quarter, and operating profit increased 5 percent.” It also projected “full-year net sales of approximately $5.85 billion” for 2015.
“Activewear results in the quarter were strong with net sales growth of 22 percent and operating profit growth of 39 percent driven by double-digit Champion growth and the acquisition of Knights Apparel. Core sales, which exclude acquisitions, increased 2 percent with growth of more than 30 percent for Champion in the department-store, midtier and sporting goods channels.”
In the third quarter, Innerwear sales totaled $667.2 million while the Innerwear “segment operating profit” was $136.8 million.
In the conference call, COO Gerald Evans explained, “The real highlight was our intimates business, which increased 9% in the quarter, driven by our Hanes and Bali bras. With our brand consolidation strategy mainly behind us, we are able to see the full power of our new initiatives. We began advertising behind the ComfortFlex Fit platform in both Hanes and Bali, during the quarter and the response has been tremendous. Our Hanes Ultimate and Hanes Platinum collections, which are sold in mid-tier and department stores, are exceeding our initial expectations.”
Evans added, “Maidenform’s integration is performing right on plan. The synergies have developed as we expected. We’re internalizing the last of the Maidenform production as we speak and have really moved more to apply our Innovate-to-Elevate against the first designs. The first of those designs actually showed up this fall in department stores as we introduce the ComfortFlex Fit styling into the Maidenform brand. Its early days, but we’re seeing results there. So Maidenform is certainly is performing to our expectations.”
Noll reminded analysts at the conference call, “we’re going to turn our attention towards 2016 and thinking about an acquisition. It does take a number of things to fall into place to make sure that a deal can get done. You need a willing seller and you need great synergies.”
The CEO made it clear that Europe might well play an important part in its expansion. “We’ve said that as we integrate DBA and get it fully integrated into Hanes brands. It’s still a pretty fragmented market throughout Europe and a lot of our categories, where you’ve got local brands, with companies that are sub-scale. And so we believe that will provide a nice platform for future acquisitions in Europe in our core categories, to then integrate that into that larger platform; and by extension it gets integrated into the full HBI global supply chain and IT infrastructure. So we think that is going to be a great platform in the future.”
The full conference call can be found here: http://seekingalpha.com/article/3616806-hanesbrands-hbi-ceo-rich-noll-on-q3-2015-results-earnings-call-transcript?auth_param=n9vbh:1b32r8e:a0ed5547b44096038d1577144885c710&uprof=53&dr=1
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