(Filed Under Financial and General Interest News). HanesBrands first quarter Innerwear sales fell 5.9%, while “segment operating profit” for the category dropped 6.4%.
Sales for the company as a whole rose 13.2% to $1.38 billion for the three months ended April 1, 2017, up from $1.22 billion for the quarter ended April 2, 2016. Total operating profit for the quarter fell 0.9% from $122.405 million to $121.268 million.
Innerwear segment operating profit was $102.701 million on sales of $505.190 million for the period, compared with segment operating profit of $109.735 million on sales of $537.021 million in the same three months at the start of 2016. Hanes categorizes its other segments as Activewear, International and Other.
The company explained that its Innerwear segment was “affected by retail environment, as expected. Segment sales and operating profit decreased 6 percent as a result of reduced consumer traffic at retailers, store closings, and cautious retailer inventory management. These factors were partially offset by growth of online sales and men’s underwear.” Hanes said that Innerwear sales “are anticipated to normalize in the second half.”
In the conference call with analysts to discuss the quarter, CFO Richard Moss said that during the period, “Our largest business, men’s underwear, grew low single-digits as order patterns normalized with a large mass retailer.”
He continued, Innerwear segment “operating margin of 20.3% was essentially flat versus last year. In basics, the strength in our men’s underwear business was more than offset by declines in other product categories due to challenging traffic and cautious inventory management by retailers.”
“With respect to intimates, the entire year-over-year decline was driven by a single retailer who began its planned door closings during the quarter. We felt good about our outlook for the second half as our shelf space is stabilizing, and we’re seeing traction with our new Maidenform offerings, which are being rolled out across multiple channels throughout the year.”
Evans added, “Innerwear was the business that was most affected by door closings as it has the broadest distribution.” But he sees improvements coming later in the year, explaining that as retailers are moving back to school purchases “closer to the event, we think things are building nicely to give us some momentum to return to positive growth in Innerwear in the second half.”
Overall, for the full year, Hanes said it expects “net sales of $6.45 billion to $6.55 billion” and “operating profit of $845 million to $895 million.” — NM
The full transcript of the conference call can be found here: https://seekingalpha.com/article/4068193-hanesbrands-hbi-q1-2017-results-earnings-call-transcript
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