- Prachi Singh |
HanesBrands has announced fourth-quarter net sales growth of 7 percent to 1.77 billion dollars with constant currency organic sales growth of 6 percent and double-digit operating profit growth. The company also declared a regular quarterly cash dividend of 15 cents per share and issued full-year 2019 financial guidance, including midpoint expectations of approximately 2 percent net sales growth, 7 percent GAAP diluted earnings per share growth, 3 percent adjusted diluted EPS growth, and 17 percent operating cash flow growth.
“We had a strong fourth quarter with organic sales growth, margin expansion, double-digit operating profit growth, strong cash generation, and significant debt and leverage reduction,” said Hanes Chief Executive Officer Gerald W. Evans Jr. in a statement.
Highlights of Hanes Q4 and full year performance
Fourth-quarter GAAP operating profit increased 95 percent to 245 million dollars and GAAP EPS increased to 44 cents. On an adjusted basis excluding actions, the company said, adjusted operating profit of 260 million dollars increased 10 percent, and adjusted EPS was 48 cents compared with 52 cents a year ago.
The company added that full-year’s 2 percent growth in constant-currency organic sales was the first annual year-over-year increase since 2014. Organic growth contributors included global Champion expansion, international diversification, and consumer-direct channel penetration. In the fourth quarter, global Champion revenue in constant currency increased more than 50 percent, excluding the US mass channel. For the year, global Champion sales excluding mass were 1.36 billion dollars, up from approximately 1 billion dollars for 2017. Revenue in the consumer-direct channel increased 23 percent in the fourth quarter and represented approximately 25 percent of total sales.
GAAP operating margin was 13.9 percent, up 630 basis points, while adjusted operating margin was 14.7 percent, up 40 basis points.
US innerwear segment sales and operating profit in the fourth quarter were flat to a year ago, while the operating margin was 22.6 percent. Sales of Innerwear basics increased 2 percent with growth in men’s and women’s underwear. Sales of Innerwear intimates decreased 7 percent, although shapewear sales realized double-digit growth after the successful relaunch of the Maidenform product line-up featuring cooling innovations.
US activewear segment sales increased 13 percent and operating profit increased 4 percent driven by increased Champion sales and sales growth of American Casualwear, which consists of branded printwear sales to the screen-print industry, seasonal wholesale activewear programs, and Alternative Apparel. American casualwear sales increased on the strength of branded printwear replenishment sales to the screen-print channel.
International segment sales rise 12 percent
Despite adverse currency exchange rates, Hanes said, international segment sales increased 12 percent and operating profit increased 28 percent. On a run-rate basis, the international segment is now the company’s largest business segment. In constant currency, international sales increased 16 percent and operating profit increased 33 percent. Constant-currency organic sales increased 9 percent. International growth came from Champion strength in Europe and Asia and constant-currency organic sales growth for innerwear in Australia, Asia and the Americas. In addition, net sales for Australia-based Bras N Things, acquired in February 2018, were 43 million dollars.
The segment’s operating margin of 16.2 percent increased 200 basis points over the year-ago quarter, benefiting from the acquisition of Bras N Things, organic growth, and integration synergies from past acquisitions.
Hanes issues financial guidance for 2019
The company expects 2019 net sales of 6.885 billion dollars to 6.985 billion dollars, GAAP operating profit of 900 million dollars to 930 million dollars, adjusted operating profit excluding actions of 955 million dollars to 985 million dollars, GAAP EPS of 1.59 dollars to 1.67 dollars and adjusted EPS excluding actions of 1.72 dollars to 1.80 dollars.
At the midpoint, the 2019 guidance versus 2018 results represents net sales growth of approximately 2 percent; GAAP and adjusted operating profit growth of 5 percent and 2 percent, respectively; GAAP and adjusted EPS growth of 7 percent and 3 percent, respectively; and operating cash flow growth of 17 percent.
For the first quarter, net sales are expected to be approximately 1.52 billion dollars to 1.55 billion dollars, GAAP operating profit to be between 135 million dollars to 145 million dollars, adjusted operating profit to be between 157 million dollars to 167 million dollars and GAAP EPS is expected to be 19 cents to 21 cents, while adjusted EPS to be 24 cents to 26 cents.
Picture:HanesBrands media centre