Back to top

Analyst Blog

Zacks Equity Research

Hanesbrands' EPS Beats; Ups View

HBI

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Hanesbrands Inc. (HBI - Analyst Report) reported third quarter 2012 earnings per share of $1.11, up 31% from the prior-year quarter, on strong sales. Earnings outpaced the Zacks Consensus Estimate of $1.05 per share.

Revenues and Operating Profits

Quarterly revenues inched up 2.5% to $1.219 billion, driven by sales growth in both Innerwear and Outerwear segments. This was almost in line with the Zacks Consensus Estimate of $1.224 billion.

Gross profit went down 3.4% year over year to $399.9 million and gross profit margin shrank 210 basis points to 32.8% during the third quarter. The decline in profit resulted from inflation in cotton prices. However, operating profit in the quarter climbed 8% to $156.5 million, driven by lower selling, general and administrative expenses. Operating profit margin expanded 60 basis points to 12.8%.

Segment Details

Innerwear Segment: Net revenue at the Innerwear segment increased 2.8% year on year to $574.3 million in the reported quarter. The increase came on the back of decent performance of men’s underwear and women’s panties. The company introduced new products like Hanes ComfortBlend men’s underwear, Hanes Classics slim fit and stretch premium underwear T-shirts, and Bali and Barely There Smart Size seamless bras. Operating profit in the segment went up 9.6% year on year to $96.8 million.

Outerwear segment: Outerwear segment sales climbed 5.2% from the year-ago period to $41.0 million, driven by strong sales of Champion activewear and Gear for Sports apparels, partially offset by higher cotton prices. Outerwear segment’s operating profit reported a decline of 4.2% to $46.3 million in the quarter.

International segment: Net sales at International segment slipped 3.2% to $132.3 million in the quarter. The reason for decline in revenue was foreign exchange headwinds. Excluding currency, revenue in this segment increased 2% in the quarter. Operating profit, however, jumped 18.8% to $17.6 million in this segment.

Direct to Consumer segment: Direct to Consumer segment sales went up 1.6% to $99.1 million and operating profit increased 17.5% to $14.4 million in the quarter.

Other Financial Updates

The company exited the third quarter of 2012 with cash and cash equivalents of $182.3 million compared with $29.7 million in the previous quarter. Long-term debt was $1.5 billion compared with $1.7 billion in the second quarter of 2012. Free cash flow was $287 million in the quarter. The company completed the retirement of approximately $300 million of floating-rate bond debt as planned in 2012.

Guidance

For the fourth quarter, the company expects net sales in the range of approximately $1.13 billion to $1.17 billion and earnings per share (EPS) of $1.00 to $1.06. The company expects gross margin percentage in the mid-30s and an operating profit margin of slightly more than 13%. Interest expense is expected to be approximately $33 million and the effective tax rate is expected to be in the mid-teens.

For fiscal 2012, the company has upped the lower end of its earnings guidance range to $2.54 – $2.60, compared with $2.50 - $2.60 anticipated previously, thereby narrowing the range. The company expects to increase its sales by approximately 2% compared to previous guidance range of $4.52 billion –$4.57 billion. For 2012, the company now expects free cash flow to be toward the higher end of the previous range of $400 million to $500 million. The company’s near-term priority for the usage of free cash flow is to reduce long-term debt and de-leverage its balance sheet.

Currently, Hanesbrands, which competes with Limited Brands Inc. , carries a Zacks #3 Rank (short-term Hold rating).

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

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

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 Zacks.com. 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
BITAUTO HOLD BITA 34.13 +10.92%
CHINA DISTAN DL 14.97 +5.57%
NOAH HOLDING NOAH 13.94 +4.89%
INTERNATIONA ICAGY 33.09 +4.72%
E HOUSECHINA EJ 10.53 +4.67%