Hanesbrands cuts sales outlook after Q2 profit slide
- Q2 profit plummets 39% to $94.9m
- Sales up 13% to $1.52bn
- Analysts upbeat despite innerwear sales fall
Innerwear sales dropped 1% in the quarter
US apparel manufacturer Hanesbrands has cut its full-year sales outlook after second-quarter net profit plummeted 39%, weighed down by one-off charges.
Net income amounted to US$94.9m for the three months to 4 July, compared to $154.6m in the same period last year.
The company incurred $126m in pre-tax charges related to acquisitions, integration and other actions, up significantly from $24m in the prior year. Adjusted net income increased 17.1% to $2014.5m from $174.6m.
Sales increased 13% to $1.52bn from $1.34bn a year ago, marking its sixth consecutive quarter of record year-on-year sales. Hanesbrands attributed the growth to a 19% increase in activewear sales, and its acquisitions of DBApparel and Knights Apparel.
However, innerwear sales edged down 1%. Sales of basics, including underwear and socks, increased while intimate apparel sales dropped, with the consumer sales environment remaining uneven.
"We continue to deliver double-digit growth in adjusted operating profit and EPS as expected, and we are tracking to our full-year profit expectations," said chairman and CEO Richard Noll.
"The integrations of our DBApparel and Knights Apparel acquisitions are proceeding on plan, and we continue to reap benefits from the past acquisitions of Gear for Sports and Maidenform. Our brand innovation platforms and global supply chain performance continue to drive margin improvement."
The company now expects full-year net sales of just under $5.9bn, down from earlier expectations of $5.9-5.95bn.
FBR&Co analyst Susan Anderson said although downstream inventory reductions affected innerwear growth, the company's "fundamental story is intact".
"What had been thought a temporary fluctuation in basics inventories at a downstream retailer turned out to be a permanent decline, a drag that will likely persist in 2H15," she said, adding: "We expect innerwear to remain pressured in 2H15, but intimates space gains/new product (MFB/Bali) and the completion of rationalisation in the mid-tier/department stores may help to mitigate."
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