Back to top

Analyst Blog

Apparel retailer Hanesbrands Inc. (HBI - Analyst Report) reported fourth-quarter 2013 earnings per share of 98 cents, down 9.2% from the comparable prior-year quarter. Earnings lagged year-ago results due to planned increases in advertising and debt-reduction costs.  

However, earnings beat the Zacks Consensus Estimate of 90 cents by 8.9%. Although earnings were lower than year-ago results, they were higher than management’s guidance of a range of 82 cents to 92 cents due to higher-than-expected revenues in most of the segments.

Moreover, higher margins backed by the success of the ‘Innovate-to-Elevate’ strategy backed the earnings upswing. The strategy focuses on value-added, higher-priced and higher-margin items that can be supplied at lower cost.

Revenues and Operating Profits

Quarterly revenues gained 12.0% and came in at $1.29 billion backed by 9 percentage point (pp) contribution by the Maidenform brand and 3 pp contribution by the rest of the segments. Sales were slightly ahead of the Zacks Consensus Estimate of $1.25 billion due to higher-than-expected revenues in all the business segments.

Gross profit went up 11.4% year over year to $443.5 million, while gross profit margin remained flat year over year at 34.5% in the fourth quarter as lower cost of sales was offset by acquisition charges.

Operating profit in the quarter inched down 0.3% to $152.5 million from $153.0 million in the year-ago quarter. Operating profit margin shrank 140 basis points (bps) to 11.9% as charges from the Maidenform acquisition weighed down margins by 90 bps.

Segment Details

Innerwear: Net revenue for the Innerwear segment climbed 19.6% year over year to $700.5 million in the reported quarter driven by double-digit growth in socks and panties, and single-digit growth in men’s underwear and bras segment.

Operating profit in the segment declined 3.5% year on year to $125.1 million, due to higher investment in advertisement to support campaigns for Hanes underwear and panties.

Activewear: Activewear segment sales went up 1.0% from the year-ago period to $340.4 million, backed by mid single-digit gains in the Champions brand. Higher sales in the Gear for Sports brand also contributed to sales growth in the segment.

The segment’s operating profit was up 9.0% to $43.7 million, compared to $40.1 million a year ago driven, by lower selling, general and administrative expenses.

International: Net sales in the International segment inched up 0.7% to $137.5 million in the quarter. Foreign exchange headwinds primarily hurt the segment results. Excluding currency, revenues in this segment increased 4% in the quarter. Operating profit slipped 8.2% to $11.2 million due to unfavorable currency translation.

Direct to Consumer: Direct to Consumer segment’s sales went up 14.3% to $107.4 million backed by contributions from the Maidenform acquisition. However, operating profit surged 30.8% to $9.3 million compared with the year-ago level backed by higher sales from in the Maidenform brand.

Fiscal Results

For fiscal 2013, earnings per share went up 49% year over year to $3.91 backed by higher profitability as a result of lower cotton costs and benefits of the company’s Innovate-to-Elevate initiative. Earnings were ahead of the Zacks Consensus Estimate of $3.82 by 2.4%.

Quarterly revenues increased 2% to $4.63 billion, while on a constant currency basis, net sales increased 3%. Sales were slightly ahead of the Zacks Consensus Estimate of $4.61 billion due to higher-than-expected sales in most of the business segments.

Other Financial Updates

The company exited the fourth quarter of 2013 with cash and cash equivalents of $115.9 million compared with $132.3 million in the previous quarter. Long-term debt was $1.5 billion in the fourth quarter of 2013 compared with $1.25 billion in the previous quarter.

On Jan 28, 2014, Hanesbrands hiked the quarterly dividend by 50% to 30 cents per share payable on Mar 11, 2014, to shareholders of record at the close Feb 18, 2014


For full-year 2014, the company expects business momentum to continue backed by the Innovate-to-Elevate strategy. Hanesbrands now expects earnings per share in the range of $4.60 to $4.80, higher from previously announced range of $4.25 to $4.50. It expects operating profits between $640 million and $660 million for the year and net sales slightly less than $5.1 billion in fiscal 2014.

Hanesbrands engages in the marketing of innerwear, outerwear and hosiery apparel and carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same industry are Columbia Sports Inc. (COLM - Snapshot Report), Michael Kors Holding Limited (KORS - Analyst Report) and Abercrombie & Fitch Co. (ANF - Analyst Report). All these stocks carry a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%