For its third quarter, Hanesbrands Inc. reported net sales of 1.81 billion dollars compared with 1.87 billion dollars a year ago. The company sold 179 million dollars in personal protective garments globally. Excluding the exited programs and the effect of changes in foreign exchange rates, total constant-currency net sales for third-quarter increased 2.6 percent. The company said in a statement that GAAP operating profit decreased 35 percent to 175 million dollars and the quarter’s adjusted operating profit excluding actions decreased 9 percent to 227 million dollars, while GAAP EPS decreased 43 percent to 29 cents and adjusted EPS decreased 11 percent to 42 cents.
“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. We saw particularly strong performance in our U.S. Innerwear and global Champion businesses, and I’m encouraged by our momentum even as we continue to operate in a challenging environment,” said Hanes Chief Executive Officer Steve Bratspies.
Highlights of HanesBrands’ Q3 performance across core categories
The company added that U.S. Innerwear sales increased 8.4 percent, excluding protective garments, with growth in the basics and intimate apparel businesses. Overall, U.S. Innerwear sales increased 37 percent over prior year driven by sales of protective garments, continued positive point-of-sale trends and inventory restocking. When the year-ago quarter is rebased to reflect the exit of the C9 Champion mass program and the DKNY intimate apparel license, sales increased 11.5 percent, excluding protective garments, and 41 percent overall.
U.S. Activewear sales declined 41 percent, a significant improvement from the second quarter and when the year-ago quarter is rebased for the C9 Champion program exit, U.S Activewear sales declined 27 percent.
Excluding 103 million dollars of C9 Champion sales in mass retail in the year-ago quarter, sales of the Champion brand, while down 27 percent over the prior year, showed an 85 percent increase over the second quarter, driven by strong point-of-sale trends and continued online growth.
As reported, third quarter International segment net sales declined 5 percent and operating profit declined 10 percent, while on a constant currency basis, net sales decreased 7 percent and operating profit declined 12 percent. Excluding sales of protective garments, core International sales declined 7 percent, marking a significant improvement from the 44 percent decline in the second quarter.
HanesBrands reveals fourth-quarter guidance
The company further said that its outlook for the fourth quarter reflects continued uncertainty due to the Covid-19 pandemic and is based on the current business environment, including the recently implemented Covid-related restrictions in Europe. For the fourth-quarter, net sales are expected to be approximately 1.60 billion dollars to 1.66 billion dollars. GAAP operating profit is expected to range from 154 million dollars to 174 million dollars and adjusted operating profit is expected to range from 160 million dollars to 180 million dollars. GAAP earnings per share are expected to range from 24 cents to 29 cents and adjusted EPS is expected to range from 25 cents to 30 cents. For the fourth-quarter 2020, the midpoint of guidance represents a net sales decline of 7 percent compared with 2019.
When comparing the midpoint of fourth-quarter 2020 guidance to 2019 results rebased to account for the exits of the C9 Champion and DKNY programs, net sales are expected to decline approximately 2 percent, GAAP operating profit and adjusted operating profits are expected to decline approximately 33 percent and 30 percent, respectively, and GAAP and adjusted EPS are expected to decline approximately 47 percent and 39 percent respectively.