HanesBrands Earnings Jump 44 Percent for Q3
On Wednesday, Winston-Salem, North Carolina-based HanesBrands held its third-quarter earnings conference call. The company reported strong third-quarter earnings growth of 44 percent on record margins and a 5 percent sales increase.
The company reported net sales for the quarter as $1.23 billion, a five percent increase from the same period 2010. Net income saw a substantially higher increase at $90.8 million, over $61.3 million a year ago. HanesBrands attributed the earnings growth to strong segment operating profitability: innerwear was up 44 percent, outerwear up 45 percent, and direct-to-consumer up 16 percent.
"We are very pleased with our strong profit and margin growth in the third quarter," said Richard A Noll, chairman and chief executive officer of Hanes. "It validates our investment in our brands, our approach to managing inflation with price, and our ability to control costs. We will stay focused on executing our strategies to deliver strong results for the remainder of 2011."
The operating profit margin of 12.4 percent was an all-time high, increasing 270 basis points over the prior year, while the gross profit margin expanded 360 basis points despite higher cotton and commodity costs.
Growth in the company's outerwear segment is partially attributed to the acquisition of Gear For Sports, a custom decorated apparel company, in November 2010. Innerware sales were also up, despite September price increases resulting from higher cotton costs.
"Brands are more important than ever, and our price increases for cotton products are helping us mitigate the margin pressure from cotton and other cost inflation," said William J. Nictakis, co-chief operating officer for Hanes. "In addition to price increases in February and June, we instituted another price increase in late September for cotton-based products, and early point-of-sale performance is good. While cautious about the consumer environment, we are focused on maintaining historical norms for margins and addressing weakness in the intimate apparel categories."