HanesBrands, a leading marketer of everyday basic apparel under world-class brands, has announced a 34.6 per cent increase in net income for the second-quarter 2017, which rose to $172,532 in line with company guidance. For the second quarter ended 1 July 2017, net sales of $1.65 bn increased by 12 per cent, primarily from acquisition contributions. On a GAAP basis, second-quarter operating profit of $229 mn increased by 3 per cent and diluted EPS of $0.47 increased by 38 per cent. Year-todate net cash from operations was $34 mn, a $163 mn improvement versus a year ago.
“We continued our strong start to 2017 in the second quarter, consistent with our guidance,” said Hanes CEO Gerald W Evans Jr. “Organic sales trends continued to improve sequentially, acquisitions are contributing value as expected, and our cashflow efforts including disciplined inventory management, are generating strong results. Our team is doing a great job executing our Sell More, Spend Less, Generate Cash strategies and laying the foundation for taking our performance to the next level in the years to come through our Project Booster initiative. We are planning for the future while executing in the
Acquisitions deliver growth
Acquisitions completed in 2016, primarily Champion Europe and Hanes Australasia, contributed approximately $220 mn in net sales in the second quarter. Organic sales decreased by 3 per cent, primarily as a result of the expected lower sales in innerwear and domestic manage-for-cash businesses as well as an unexpected timing shift of sports apparel sales to the third quarter. However, organic sales trends continued to improve from previous sequential quarters.
Second-quarter sales in the online channel globally increased by around 25 per cent and represented approximately 9 per cent of total sales. Global Champion sales increased by 7 per cent in the second quarter on a pro forma basis.
Business segment highlights
Year-over-year innerwear segment sales decreased by less than 3 per cent in the second quarter, compared with lower sales of 6 per cent in the first quarter 2017 and 8 per cent in the fourth quarter 2016. There was sequential improvement for both the basics and intimates businesses. Operating profit declined by 8 per cent as a result of lower sales and Project Booster expenses.
Activewear sales increased by 1 per cent. Acquisition benefits and sales growth for Hanes retail and the online channel were partially offset by the later-than-expected licensed sports apparel shipments and the effect of retailer bankruptcies. Operating profit decreased by 10 per cent. Second-quarter international segment sales increased by 76 per cent as a result of acquisitions and strong results in Asia, while operating profit increased by 152 per cent, benefiting from European acquisition synergies.
2017 financial guidance
Hanes has reaffirmed its full-year guidance for 2017 and issued third-quarter guidance for select performance measures. For 2017, the company expects net sales of $6.45 bn to $6.55 bn, GAAP operating profit of $845 mn to $895 mn, adjusted operating profit excluding actions of $935 mn to $975 mn, GAAP EPS for continuing operations of $1.70 to $1.82, adjusted EPS for continuing operations excluding actions of $1.93 to $2.03, and record net cash from operations of $625 mn to $725 mn.
Compared with 2016 results, the midpoint of 2017 guidance represents net sales growth of 8 per cent, GAAP operating profit growth of 12 per cent, adjusted operating profit growth of 5 per cent, GAAP EPS growth from continuing operations of 26 per cent, adjusted EPS growth from continuing operations of 7 per cent, and operating cash flow growth of 11 per cent.
