HanesBrands, parent company of Hanes Branded Printwear (asi/59528), announced revenue of $1.47 billion for the second quarter of 2016, down 3% from the same quarter last year and falling short of analyst estimates of $1.53 billion. The supplier’s operating profit for its innerwear segment, which accounts for the bulk of its sales, fell 10.2% to $181.4 million. Hanes attributed the decline to a reflection of the retail environment as a whole during April, May and June.
“While our second quarter results declined over last year, our Q2 plan called for a decline due to the tough comparisons in basics and Champion as well as quarterly timing shifts in shipments,” said Hanes Chief Financial Officer Richard D. Moss in an earnings call. “Year-to-date, our results are right in line with our expectations for sales, operating profit, earnings per share and cash flow. We're confident in our ability to deliver on this second half as our sales initiatives have traction and are ramping, our acquisitions are generating synergies and our inventory reduction actions are working.”
The company reported a 7% drop in its activewear segment, which contains its promotional product apparel business. Decline in that segment was attributed to the Champion business in the U.S. staying flat compared to last year. Moss said that growth in mass and college bookstore channels were offset by declines in the sporting goods, mid-tier and department store channels. “They were impacted by bankruptcies and a tough comparison as we had a significant concentration of shipments in last year's second quarter,” Moss said.
Hanes changed its full-year guidance in part due to the completion of acquisitions of Champion Europe in the second quarter and Pacific Brands Ltd. in the third quarter. Fully-reported earnings on a per-share basis have dropped to a range of $1.44 to $1.54 from a previous estimate of $1.51 to $1.57 and operating profit fell to $760 million to $795 million, compared with $780 million to $815 million previously.
As for the rest of the full-year guidance, Hanes maintains its projections of 8% growth in revenue.