In the money: Hanesbrands tight-lipped on Maidenform plans
Hanesbrands' brand portfolio includes Playtex, Bali and Just My Size, Wonderbra and Champion
Chairman and CEO Richard Noll last week described Maidenform as a "natural fit" into the core Hanesbrands business.
Maidenform, which sells intimate apparel bras, shapewear and panties under brands including Flexees, Lilyette, Self Expressions and Sweet Nothings, as well as Donna Karan and DKNY under license, sources all of its products from third-party manufacturers.
Maidenform could add $0.60 to earnings per share within three years when synergies are fully realised, Noll noted, with the company's main focus being to deliver that as quickly as possible.
When asked whether Hanesbrands will continue with the innovation plans Maidenform outlined prior to the acquisition, Noll told analysts yesterday (30 July): "Right now, we are still competitors. We have to operate at such. We're two independent companies."
He added: "And until close, that will be the case, so we're not involved or will we be involved in any part of what their launch plans are or what their plans are with retail until after the close of the business. So that's all yet to come and be developed and so we've got to take it a step at a time."
Noll said that in terms of potential acquisitions going forward, geographic expansion in Hanesbrands' core categories could be an option for complementary growth opportunities.
"I've used examples of how we may have a strong men's underwear business in one market and doing a small intimate apparel acquisition to build critical mass could make sense. So clearly, that can be part of our long-term strategy and it's something that's clearly in our minds," he noted.
The comments came as the company saw its second-quarter profit soar to $121.6m for the three months to 29 June, compared to $1.2m in the same period last year - helped by its innovate-to-elevate initiatives and lower cotton costs.
Hanesbrands said its average cotton cost in the second quarter of this year was $0.93 a pound, compared to $1.84 in the previous year.
"When you consider the current soft retail environment, this is a significant accomplishment and one that underscores a very simple message," Noll said. "Our innovate-to-elevate strategy is working very well."
Innerwear sales rose 3% during the second quarter, driven by improvements across both basics and intimates, particularly men's underwear and socks. The activewear segment, formerly named outerwear, posted flat sales and international sales slipped 1%, but were up 5% on a constant currency basis.
Commenting on the retail environment, co-chief operating officer Gerald Evans said sell-through at retail improved during the second quarter, compared to the first quarter but "is still choppy overall".
This retail softness negatively impacted shipments of intimate apparel during the second quarter, he explained, but stressed that retail inventories are "now on the right levels".
Looking forward, Evans noted: "As we turn our attention to executing back-to-school with our retail partners, we are cautiously optimistic about the consumer, but feel our strong brands are well positioned going into this key selling period."
Hanesbrands also lifted its full-year earnings guidance to $3.50-3.65 per share, up from of $3.25-3.40. "And we are just getting started," Noll noted. "The true earnings power of our business is only beginning to shine through. Significant earnings potential remains as we push to the higher end of our operating margin goal."
Sales, meanwhile are expected to be $4.55bn against the company's earlier guidance of around $4.6bn, due to the sales softness in the first half as well as currency headwinds.
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