Hanesbrands revenue hits $1.8bn, global Champion sales up 16%

By

Jennifer Braun

Published
Nov 2, 2017

Hanesbrands saw sales climb 2 percent in the third quarter ended Sept. 30, to $1.80 billion, returning to organic sales growth, for the first time in eight quarters. The rise was driven primarily by double-digit international segment growth.

 
“We returned to organic growth in the quarter as international results were stronger than expected, and we are tracking to the midpoint or higher of our cash flow guidance for the year,” said Hanes Chief Executive Officer Gerald W. Evans Jr.

“The value of diversifying our portfolio with international and activewear acquisitions is evident, and we are making progress on several initiatives to adapt to the evolving and challenging retail environment in the United States.”

On a GAAP basis, third-quarter operating profit of $253 million increased 11 percent and diluted EPS of $0.55 increased 22 percent.
 
The global marketer of everyday basic apparel benefitted from geographic diversification and international sales in the third quarter, bolstered by Hanes Europe Innerwear, Champion Europe, and Hanes Australasia, which accounted for 31 percent of sales in the third quarter. Global Champion sales increased 16 percent in the quarter.
 
The company still faced some challenges in the third quarter including innerwear sales which were negatively affected by a difficult back-to-school retail season for the apparel sector. Innerwear net sales and operating profit each decreased 5 percent in the third quarter.
 
Activewear results were however on the rise including a net sales increase of 1 percent and an operating profit increase of 8 percent. 
 
The company’s positive results are due to a growth-by-acquisition strategy that has included the acquisition of brands such as Pacific Brands Ltd., Gear for Sports, Knights Apparel, and more. In the third quarter for example, sales from the acquisition of GTM Sportswear contributed approximately $15 million of sales in the quarter, resulting in positive activewear results.
 
Most recently, the company also acquired Alternative Apparel for $60 million in cash. The Georgia-based company is expected to have full-year 2017 net sales of approximately $70 million. In the fourth quarter alone, Alternative Apparel is expected to generate an estimated $15 million in sales for Hanes.
 
On the international front, net sales increased 16 percent and operating profit increased 25 percent for the International segment in the third quarter. Results were driven by Champion brand growth in Europe and Asia, underwear and intimate apparel growth in Australia and Latin America.
 
The company also continued to see strong double-digit online sales growth. Across all product categories online sales grew. The growth percentage of third-quarter sales in the online channel globally was in the high 20s, and online sales represented approximately 9 percent of total sales. Even Innerwear sales which were down, saw online sales - including those through traditional retailer websites - increase by more than 20 percent.
 
As a result of strong sales and recent acquisitions, Hanes has updated its full-year guidance. 
 
“In the fourth quarter, we expect to once again achieve organic sales growth,” Evans said. “We are continuing to drive strong double-digit online sales growth across businesses and geographies. We are making progress on our goal to use our brands, innovations, acquisitions and online investment to create shareholder value and drive sustainable growth.”
 
For 2017, the company now expects net sales of approximately $6.450 billion to $6.475 billion, GAAP operating profit of $830 million to $840 million, and adjusted operating profit excluding actions of $925 million to $935 million.
 
Hanes, however, continues to be cautious considering the unclear outlook of the U.S. sales environment, as well as the expected adverse effect of the Sears Canada bankruptcy.
 
The company expects total net sales of approximately $1.625 billion to $1.650 billion in the fourth quarter.