HanesBrands Posts 3% Revenue Gain
Net Income Increased Sharply By 21%
North Carolina-based HanesBrands (asi/59528) has announced its sales for the three months ended September 29 rose 3% to $1.22 billion, improving from $1.19 billion during the same time period in 2011. Net income increased sharply by 21%, reaching $109.9 million, up from $90.8 million a year ago.
"We are executing well and had a very good quarter as reflected in our operating margin, free cash flow and EPS, all of which are all-time quarterly records," said Richard Noll, CEO of HanesBrands. "Cotton inflation is behind us, and we are generating momentum for continued growth." In a positive signal to investors, Hanes said its commodity costs are fixed for the rest of 2012, meaning the company will be affected less by inflation for cotton and other materials.
The company's overall operating profit margin increased 60 basis points to 12.8% in Q3, while HanesBrands generated free cash flow of $287 million. Financials show the company was buoyed by double-digit growth of Hanes and Champion underwear as well as higher sales of Champion activewear. The company's international segment net sales declined 3%, an earnings statement shows.
Amid its profit and sales uptick, HanesBrands has also announced that it is dissolving the Outer Banks brand and not divesting it, contrary to plans proposed in May. "We evaluated a number of offers for the brand and ultimately we decided to retire the brand," said John Fryer, general manager for Hanes Branded Printwear. "We felt like it was the best decision for us competitively and financially." Fryer added that the sale of remaining Outer Banks inventory was completed this week.
HanesBrands has adjusted upward its full-year net income expectation to $2.54 to $2.60 per share, and executives now expect 2012 revenue of $4.52 billion.