• Q3 profit grows 36.3% to US$162.1m
  • Gross margin widens to 36.5%
  • Net sales up 14% to $1.59bn
Hanesbrands has upped its full-year profit guidance

Hanesbrands has upped its full-year profit guidance

US apparel manufacturer Hanesbrands has upped its full-year profit guidance as it revealed higher third-quarter earnings, boosted by recent acquisitions.

Net profit grew 36.3% to US$162.1m in the three months ended 3 October, from $118.9m a year earlier.

The company, whose brands include Hanes, Champion and Playtex, has made a number of acquisitions, most recently its $200m deal for college fashion firm Knights Apparel.

Gross margin widened to 36.5% from 35.5%, while innerwear and activewear operating profit margins increased by 40 basis points and 230 basis points, respectively, as a result of a strong supply chain performance and benefits from the group's Innovate-to-Elevate strategy.

Net sales were up 14% to $1.59bn, while core sales, which exclude acquisitions and a retailer exit from Canada, increased 3% in constant currency.

Innerwear sales grew 3% in the quarter as sales of intimates rebounded with high-single-digit growth on the strength in bras and shapewear. Activewear sales were up 22% driven by double-digit Champion growth and the acquisition of Knights Apparel.

International sales and operating profit increased “significantly”, the company said, despite negative foreign currency impacts, as a result of the acquisition of DBApparel in Europe and strong results in Japan.

Cowen & Co analysts believe Hane's Champion business was the standout, growing its sales 33% in the sporting goods, mid-tier and department store channels, gaining share from competitors such as Adidas in the sporting goods sector.

Hanes CEO Richard Noll noted: “We had another great quarter of double-digit growth that reflects our continued value-creation potential. We also reached another milestone in our strategic use of cash flow with the resumption of share buybacks.”

For 2015, Hanesbrands has updated its full-year guidance and now expects adjusted EPS in the range of $1.66 to $1.68, from previous guidance of $1.61 to $1.66. Sales are expected at $5.85bn from previous guidance of slightly less than $5.9bn.

FBR & Co analyst Susan Anderson added: “The solid results exhibit Hanesbrands' staple-like nature, temporary fluctuations (lower innerwear in 1H15, higher in 3Q15) that even out annually, and continued margin expansion through Innovate-to-Elevate and acquisition synergies. Hanesbrands raised 2015 guidance indicates that its thesis (multi-year EPS power acceleration through acquisitions/margin expansion virtuous cycle) remains intact."