HanesBrands Reports First-quarter 2013 Financial Results

HanesBrands, Winston-Salem, N.C., reported first-quarter 2013 net sales, operating profit and diluted earnings per share consistent with the high end of estimated preliminary results announced April 4.

For the quarter ended March 30, 2013, net sales declined 3 percent to $945 million, operating profit increased substantially to $85 million, and EPS improved to $0.51 from a $0.25 loss a year ago. While net sales for the first quarter were hampered by a sluggish retail environment, the company's operating profit margin expanded 790 basis points over the year-ago quarter, benefitting from an improved cotton-cost and product-pricing environment and the company's Innovate-to-Elevate margin-enhancement initiatives.

"We are pleased with our ongoing strategic execution, which resulted in improved profitability in the first quarter and bolsters our outlook for the rest of the year," said Richard A. Noll, chairman and chief executive officer of Hanes. "Our operating profit margin was strong, our brands are commanding more retail shelf space, and our product innovation is working. We have more margin improvement potential ahead of us."

First-Quarter 2013 Financial Highlights and Business Segment Summary
Key accomplishments for the first quarter include:

• Space Gains Driven by Innovate-to-Elevate Platforms. The company continues to secure net space gains at retailers through its Innovate-to-Elevate platforms, which integrate the strengths of the company's iconic brands, low-cost supply chain and product innovation. These platforms include ComfortBlend fabric underwear, socks and T-shirts, Smart Sizes seamless bras, and Tagless apparel.
• Strong First-Quarter Operating Margin. The company achieved a first-quarter operating margin of 9 percent. Innovate-to-Elevate initiatives, which support higher unit selling prices and lower unit costs, and lower cotton costs drove a nearly 800-basis-point improvement in operating margin over the first quarter a year-ago.
• Reduced Quarter-End Inventory Versus a Year Ago. Hanes continues to focus on inventory management, with its quarter-ending inventory level 17 percent lower than a year ago.

Key segment highlights for the first quarter include: