On a GAAP basis, operating profit surged 25 per cent to $90 million while earnings per share (EPS) rose higher by 30 per cent to $0.13, both up from the year ago quarter at HanesBrands in the first fiscal quarter ended April 4, 2015.
“Net sales drove up 14 per cent year over year to $1.2 billion in the first quarter of fiscal 2015, reflecting the benefits of our multiyear acquisition strategy,” the innerwear marketer said in a press release.
“We are off to a great start in 2015, once again delivering a double-digit increase in EPS, while staying on track on our full-year growth plans,” Hanes CEO Richard Noll said.
“Our acquisition strategy continues to create value with DBApparel, Maidenform and Gear for Sports all contributing substantially to our double-digit growth,” he added.
Since the end of the first quarter, Hanes closed on the acquisition of Knights Apparel, a leading seller of licensed collegiate logo apparel in the mass retail channel.
First quarter of fiscal 2016 sales were driven by DBApparel which contributed net sales of $184 million as against $164 million in the prior year first quarter.
The company’s adjusted operating profit margin expanded 20 basis points in the first quarter; while core adjusted operating margin increased 90 basis points but was partially diluted by acquisition of DBApparel.
It too added that the company continues to derive significant benefits from the previous acquisitions of Gear for Sports and Maidenform.
Innerwear net sales declined 4 percent from a year quarter in the first quarter of fiscal 2016, due to a decline in retailer’s inventory reduction of approximately two weeks of supply.
Activewear net sales ascended 1 per cent in the first quarter, which were affected by the timing of Champion retail space gains for 2015, many of which will occur in the second quarter.
Despite currency headwinds and Target’s exit from Canada, international sales and operating profit increased significantly, with strong contributions from DBApparel, Japan and Latin America.
Hanes has increased its fiscal 2016 guidance to reflect the expected contributions from Knights Apparel and has updated its expectations for currency exchange rates for the rest of the year.
Hanes now expects net sales of approximately $5.9 billion to $5.95 billion, adjusted operating profit of $853 million to $873 million and adjusted EPS of $1.61 to $1.66 in fiscal 2016.
According to Hanes, the new guidance represents a rise of 10.9-11.8 per cent for net sales, 12-14 per cent for adjusted operating profit and 13-17 per cent for adjusted EPS over fiscal 2015.
The company continues to expect net cash from operating activities to total $550 million and $600 million in fiscal 2016.
Interest expense and other expense are expected to be approximately $95 million to $100 million combined, up $5 million from previous guidance as a result of additional debt to finance the Knights Apparel acquisition.
