(Filed Under Financial and General Interest News). Innerwear sales fell 6.9% at HanesBrands, while “segment operating profit” fell 13.6% in the three months ended September 29, 2018. For the company as a whole, sales rose while net income fell.
“While we were disappointed that Innerwear sales were lower than expected in the third quarter, consumer demand was strong, and we believe that continued underlying strength supports our outlook for improvement,” declared CEO Gerald Evans.
The company provided further information on the Innerwear division, noting “the results were lower than expected, primarily as a result of slower replenishment orders compared with strong point-of-sale trends and higher raw material costs. Innerwear basics sales decreased, with socks and panties sales down and men’s underwear sales up. All three categories had point-of-sale growth. Products featuring innovation now account for 20 percent of basics sales.”
Hanes added that “Innerwear intimates sales decreased, although the ongoing implementation of revitalization plans for shapewear and bras are beginning to show progress. New product designs and innovation will continue to be rolled out through the first half of 2019.”
Looking ahead to the last three months of the year, “the company expects Innerwear sales in the quarter to be comparable to a year ago, representing a significant improvement from the third-quarter year-over-year results. The outlook is based on strong fundamentals, early-quarter order bookings, and an expectation for shipments to more closely match strong consumer purchase rates that began in the third quarter.”
Innerwear sales totaled $599.7 million in the three months ended September 29, 2018 compared to $644.1 million in the same quarter last year. For the first nine months of 2018, sales for the segment were $1.785 billion, down 4.4% from $1.868 billion in the same period in 2017.
Innerwear segment operating profit for the third quarter of 2018 was $132.2 million compared to $153.0 million in the three months ended September 30, 2017. For the first three quarters of 2018, segment operating profit was $392.8 million, down 12.2% from $447.2 million in the same period in 2017.
HanesBrands as a whole, which includes Activewear and International divisions, reported net income of $171.4 million on sales of $1.849 billion in the third quarter, compared to net income of $203.4 million on sales of $1.799 billion in the same period last year.
Looking at the full year 2018, “The company expects full-year 2018 net sales of $6.735 billion to $6.775 billion [and] GAAP operating profit of $860 million to $875 million.” The new guidance reflects “the bankruptcy of Sears Holdings, the strengthening dollar, and other factors.” The company added, “In addition to the $14 million Sears Holdings bad-debt charge, the updated guidance assumes no sales or profit contribution in the fourth quarter from Sears, which accounted for approximately 1 percent of total year-to-date company sales. Prior to the bankruptcy filing, Hanes had expected fourth-quarter sales of approximately $15 million and operating profit of approximately $5 million from Sears.”
“Compared with the company’s previous outlook for foreign exchange rates, the company expects the strengthening dollar to have a greater negative currency effect on net sales. For the fourth quarter, the company expects currency exchange rates to reduce sales by $29 million year over year, up from the previous outlook of a $12 million headwind.” — NM
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