HanesBrands FY17 net sales increase 7 percent

HanesBrands reported full-year net sales growth of 7 percent to 6.47 billion dollars and fourth-quarter net sales increase of 4 percent to 1.645 billion dollars. Organic sales, the company said, increased 2 percent in constant currency in the fourth quarter. Hanes however reported net loss of 384.6 million dollars for the fourth quarter while for the full year net income reduced to 61.8 million dollars.

“2017 was a successful year during which we focused on diversifying our business to be able to consistently deliver annual topline growth,” said Hanes Chief Executive Officer Gerald W. Evans Jr. in a media release, adding, “We have additional work to do, including addressing inflationary and short-term cost pressures, but our brands are strong, our key market shares are increasing, our international businesses are sizable and growing, and we are driving significant direct-to-consumer growth worldwide. We expect another strong year of operating cash flow in 2018.”

Important highlights of the fourth quarter and year under review

On a GAAP basis, which includes the effect of the tax charge related to US federal income tax reform, the company reported a fourth-quarter loss per diluted share of 1.06 dollars, and full-year EPS was 0.17 dollar. GAAP operating profit for the full year decreased 7 percent to 723 million dollars and fourth-quarter operating profit of 120 million dollars decreased 41 percent.

Innerwear segment sales increased 1 percent in the fourth quarter, driven by strong men’s and children’s underwear growth. For the full year, segment sales decreased 3 percent. Online channel sales increased 12 percent. Operating profit decreased 6 percent in the fourth quarter and for the full year.

Activewear segment sales increased 9 percent in the fourth quarter and 3 percent for the full year. Fourth-quarter organic sales increased 4 percent, while the acquisition of Alternative Apparel in October 2017 contributed 18 million dollars in sales. Core Champion performance, including strong sales of the Champion Life line of products and reverse-weave fleece, and higher sports apparel sales drove quarter growth. Online channel sales for the segment increased 27 percent in the quarter. Segment operating profit increased 2 percent in the fourth quarter and 1 percent for the full year.

International segment net sales up 8 percent in the fourth quarter and 34 percent for the full year. Organic sales in constant currency increased 3 percent in the quarter and 5 percent for the year. Space gains, including new store openings, and strong consumer demand at retail and online, the company added, drove activewear and innerwear strength across all geographies – the Americas, Asia, Europe and Australia. Operating profit increased 8 percent in the fourth quarter, and acquisitions contributed to 45 percent growth for the full year.

HanesBrands announces acquisition of Bras N Things

Hanes also announced that the company has entered into a definitive agreement to acquire Bras N Things, a leading specialty retailer and online seller of intimate apparel in Australia, New Zealand and South Africa. In 2017, Bras N Things had net sales of approximately 180 million Australian dollars (144 million dollars). The company said, all-cash transaction is valued at 500 million Australian dollars (approximately 400 million dollars) on an enterprise-value basis.

“Bras N Things is a leading intimate apparel retailer and ecommerce business that is a strategic and natural complement to our very successful Bonds underwear business in Australia and New Zealand,” Evans further said, adding “This consumer-direct sales model has significant potential for expansion into other geographic markets. We are delighted that Bras N Things CEO George Wahby, who oversees a talented management team, will remain with our Hanes Australasia business unit.”

Bras N Things, based in Sydney, sells proprietary bras, panties and lingerie sets through a retail network of approximately 170 stores and ecommerce platform. The company’s three-year compound annual growth rate is 11 percent, and online sales last year increased 71 percent and represent nearly 10 percent of total sales. The company operates 154 stores in Australia, 10 stores in New Zealand and 7 stores in South Africa.

Hanes issues initial guidance for FY18

For 2018, Hanes expects net sales of 6.72 billion dollars to 6.82 billion dollars, GAAP operating profit of 870 million dollars to 905 million dollars, adjusted operating profit excluding actions of 950 million dollars to 985 million dollars, GAAP EPS of 1.54 dollars to 1.62 dollars, adjusted EPS excluding actions of 1.72 dollars to 1.80 dollars, and net cash from operations of 675 million dollars to 750 million dollars.

Key assumptions in the company’s guidance include, Hanes said: a cautious outlook for the US brick-and-mortar consumer environment, including the first-half effect of door closures; an increase in full-year organic sales driven by online, global Champion, and international growth; and higher commodity costs and increased marketing investment to support additional planned product innovation. At the midpoint of 2018 guidance, net sales are expected to increase approximately 5 percent compared with 2017.

On a pro forma basis, applying an income tax rate of approximately 16 percent to 2017 results, consistent with the effect of tax reform, the company expects GAAP EPS would have been 1.05 dollars higher and adjusted EPS would have been 0.25 dollar lower. At the midpoint of 2018 guidance, GAAP EPS would increase 30 percent compared with pro forma 2017 results, and adjusted EPS would increase 5 percent on a pro forma comparison basis.

For the first quarter net sales are expected to be in the range of 1.42 billion dollars to 1.44 billion dollars. GAAP EPS is expected to be 0.17 dollar to 0.20 dollar, and adjusted EPS is expected to be 0.23 dollar to 0.25 dollar. In constant currency, organic growth is expected to decrease less than 1 percent in the quarter, reflecting the effect of retailer door closures in the United States and expectations of ongoing tight inventory management by retailers.

Picture:HanesBrands website


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