Back to top

Analyst Blog

Apparel retailer Hanesbrands Inc. has announced that it has retained its fiscal 2014 earnings guidance which was announced during the fourth-quarter and fiscal 2013 earnings conference call on Jan 29, 2014.

The Winston-Salem, NC-based company continues to expect fiscal 2014 earnings per share in a range of $4.60 to $4.80. HBI had raised its fiscal 2014 earnings guidance during the fiscal 2013 earnings conference to reflect the decent second-half performance.

It expects operating profits between $640 million and $660 million for the year. Net sales are expected to be slightly less than $5.1 billion in fiscal 2014. The company expects the Maidenform acquisition (Oct 8, 2013) to contribute approximately $500 million to sales during fiscal 2014.

Maidenform sells intimate apparel which is a core category of Hanesbrands. The acquisition brought the former’s popular brands like Flexees, Lilyette, Self Expressions and Sweet Nothings into the latter’s already-rich portfolio. Cash flow from operation is expected within $450 to $550 million.

For full-year 2014, Hanesbrands expects the Innovate-to-Elevate strategy to drive the business momentum. The strategy focuses on value-added, higher-priced and higher-margin items that can be supplied at lower cost. The strategy has helped Hanesbrands to increase its adjusted operating profit margin by 400 basis points over the past five years. Moreover, it has generated $1.9 billion in cumulative cash from operations over the same time frame.

Fourth Quarter Results

On Jan 29, Hanesbrands reported fourth-quarter 2013 earnings per share of 98 cents, down 9.2% from prior-year quarter 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 to 92 cents due to higher-than-expected revenues in most of the segments.

Net sales 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 revenues in all the business segments.

Fiscal 2013 Results

For fiscal 2013, earnings per share went up 49% year over year to $3.91 as lower cotton costs and benefits from the Innovate-to-Elevate initiative improved profitability. 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 impressive sales in most of the business segments.

Hanesbrands sports a Zacks Rank #1 (Strong Buy). Other stocks worth considering in the textile-apparel sector include Joe’s Jeans Inc. , Micheal Kors Holdings Ltd and Columbia Sportswear Co. . While Joe’s Jeans and Micheal Kors carry the same Zacks Rank as Hanesbrands, Columbia Sportswear carries a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.