HanesBrands reports higher-than-expected sales and earnings, disappoints with guidance
HanesBrands Inc., the Winston-Salem, North Carolina-based owner of brands including Champion and Playtex, announced better-than-expected third-quarter financial results on Thursday, but provided a less impressive outlook.
In the third quarter ended September 26, 2020, net sales at the company totaled $1.81 billion, decreasing 3.1% from $1.87 billion the year before. As well as the negative effect of the Covid-19 pandemic, sales were also impacted by Hanes’ exit from the C9 Champion mass program and its DKNY intimate apparel license, which together accounted for $119 million in sales in the prior-year period.
These decreases were partially offset by the addition of $179 million in sales of personal protective garments.
Quarterly net income at the company came to $103.3 million, down 44.2% from $185.1 million, while diluted earnings per share decreased 43%, from $0.51 to $0.29. Adjusted earnings per share were $0.42.
As reported by MarketWatch, Wall Street analysts surveyed by FactSet had expected the company to report adjusted earnings per share of $0.39 on sales of $1.66 billion.
By segment, Hanes’ U.S. innerwear sales increased 8.4% excluding protective garments, or 37% taking the sales in this new category into account. U.S. activewear sales dropped 41%, largely due to declines in sports apparel revenues related to Covid-19.
Sales in the company’s international segment slipped 5%, or 7% on a constant currency basis.
“I’m pleased with our third-quarter results as we saw significant improvements across our business and exceeded our expectations for sales, profits and cash flow from operations,” said Hanes CEO Steve Bratspies in a release. “We are conducting an in-depth review of our business as we build our growth strategy. Parts of our strategy will begin to unfold in the fourth quarter, and I look forward to reporting on our progress in the months ahead.”
Year to date, Hanes reported $4.86 billion in net sales, down 6.8% from $5.21 billion in the prior-year period. Net income for the first three quarters of the year were $256.6 million, or $0.72 per diluted share, decreasing from $415.7 million, or $1.14 per diluted share.
Looking forward to the fourth quarter, Hanes said that it expects to report net sales in the range of $1.60 billion to $1.66 billion. Earnings per share are predicted to be between $0.24 and $0.29, with adjust EPS expected to range from $0.25 to $0.30.
FactSet analysts had been expecting an EPS outlook of $0.44 on sales of $1.71 billion.
In light of the company’s disappointing financial guidance, shares in HanesBrands were down 20% on Thursday afternoon.
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