• Q4 profit grows 33.3% to $119.2m
  • Sales down 7% to $1.41bn
  • Company issues "conservative" guidance

US apparel manufacturer Hanesbrands delivered a somewhat disappointing fourth-quarter performance, as warmer weather hurt sales, and provided "conservative" guidance for fiscal 2016. 

Net income reached US$119.2m for the three months to 2 January, compared to $89.4m in the same period a year ago. 

Sales were down 7% to $1.41bn from $1.52bn last year. Net sales and core sales for both Innerwear and Activewear were weighed down by reduced domestic retail traffic and warm weather in November and December. Innerwear core sales edged down 2%, while Activewear core sales dropped 12%. 

Gross margin improved to 38.4% from 35.8%. 

Full-year net income increased 6% to $428.9m from $404.5m in the prior year. Sales increased 7.6% to $5.73bn from $5.32bn, representing the company's third consecutive year of record sales, helped by acquisition benefits, margin expansion and cost control.

"We delivered our third consecutive record year in 2015, although we are disappointed with our fourth-quarter performance," said Hanes chairman and CEO Richard Noll. "For 2016, I feel confident in our growth expectations and outlook for a fourth consecutive year with a double-digit increase in adjusted EPS." 

The company expects 2016 net sales to be between $5.8bn and $5.9bn, representing growth of 1-3%. Hanesbrands said earnings per share will vary on actual performance, pre-tax charges and tax rate, but could range from $1.60 to $1.77. 

Although FBR & Co analyst Susan Anderson described the guidance as "conservative", she noted: "We remain buyers of Hanesbrands as it executes on its virtuous cycle using cash flow from organic margin expansion/revenue growth and acquisition synergies to fund additional acquisitions (potential for acquisition in 1H16) and initiatives."

"We continue to believe that Hanesbrands is still in the early innings of a multi-year acceleration in earnings power and transformation to an elevated consumer products company."

Last month, analysts at FBR & Co highlighted the ten trends they believe will shape the US clothing and footwear sector this year. One prediction is that Hanesbrands will make an acquisition, which they say could drive earnings. 

Combating the new normal – 10 trends for 2016