Innovation is seen as key to driving top-line growth at Hanesbrands

Innovation is seen as key to driving top-line growth at Hanesbrands

Underwear and activewear maker Hanesbrands says it is "confident" in its plans for the full year thanks, in part, to the roll-out of an advanced odour protection technology that it says has the potential to impact the overall apparel category.

Despite a tough second quarter that saw sales slip 3% to US$1.47bn for the three months ended 2 July, and adjusted earnings of 51 cents a share, Hanesbrands reiterated its guidance for full-year adjusted earnings of $1.89 to $1.95 a share on revenue between $6.15bn and $6.25bn. 

Hanesbrands "on plan" despite tough Q2

"Our growth initiatives for the second half are unfolding as planned and are tracking to our full-year guidance," Hanes COO and CEO-elect Gerald W Evans Jr, says. 

The North Carolina-based company is basing its optimism on synergies generated from recent acquisitions such as Hanes Europe and Knights Apparel, inventory reduction actions, and sales initiatives that "have traction and are ramping." And one of the key drivers for growth over the second half of the year is its new Fresh IQ technology, which "mechanically attacks" bacteria and odour in men's underwear and socks.

A pillar for confidence, Fresh IQ has received a strong reception among retailers so far according to Hanes. "In fact, we've seen some of our highest advertising testing ever with this new product," Evans told analysts during this week's earnings call. "The benefits of Fresh IQ span both innerwear and activewear and it's now in the market with men's underwear, socks and certain Champion products."

Evans adds the company even believes the innovation has the potential to impact the overall apparel category.

Hanes, which began rolling out Fresh IQ in the third quarter, says it will continue to push the technology throughout the remainder of year. "We've gotten some of the strongest responses from consumers we've seen in some time from a purchase intent standpoint. It's going to be available across all of our men's underwear and socks." 

Fresh IQ will roll out across the company's core and innovation platforms such as X-Temp or ComfortBlend. The ComfortBlend fabric is inspired by materials used in performance activewear that combine cotton and synthetic yarns for products that are softer, shrink less, and dry faster. While X-Temp helps keep wearers cooler and drier by increasing the rate of evaporation when their temperature rises, and reducing the rate of evaporation when they're cooler. 

"It's very similar to what we did a decade ago or so with our Tagless tee," says Evans. "The retailers are very excited about this and you'll see some shelf expansion but also significant promotion activity behind it as we roll late into the third quarter and into the holiday period and we'll also begin our media support in the fall as well."

Evans adds that the innovation is "very simple for the consumer to understand," and addresses "a concern that many consumers have." He adds: "Our purchase intent measures indicate that the consumer clearly understands it and desires it."

The technology is expected to spark "better core top-line growth" in the second half of the year according to FBR & Co analyst Susan Anderson.