We maintain our Outperform rating on Hanesbrands following its
remarkable second-quarter fiscal 2014 results and raised outlook
for the year. Earnings per share of $1.71 beat the year-ago results
and the Zacks Consensus Estimate by 44% and 14%, respectively.
Profit was driven by higher margins backed by the increased supply
chain operating efficiencies, lower selling, general and
administrative costs, and successful integration of the Maidenform
Brands. Sales were in line with the Zacks Consensus Estimate and it
surpassed year-ago results by 12%. The company is also benefiting
from favorable pricing and successful implementation of the
"Innovate to Elevate" strategy. Under this strategy, the company
focuses on high-priced, high-margin products that can be supplied
at lower costs. Overall, we are impressed with the company's strong
brand portfolio and its continuous innovations. Moreover, it is
gaining shelf space at major retail stores through deals with
Headquartered in Winston-Salem, NC, Hanesbrands Inc. engages in
the design, manufacture, sourcing and sale of apparel essentials
for men, women and children in the U.S. and internationally. The
company offers products under well-established brands such as
Hanes, Champion, Playtex, Bali, Just My Size, Barely There and
Hanesbrands distributes its products through various channels,
including mass merchants, national chains and department stores and
other retail channels, such as third-party embellishers, specialty
retailers, warehouse clubs and sporting goods stores.
Hanesbrands reports its operating results under four major
Innerwear: This segment manufactures and sells core apparel
products, such as women's intimate apparel, men's underwear, kids'
underwear and socks, marketed under well-known brands like Hanes,
Bali, Playtex, Barely There, Just My Size and Wonderbra. Innerwear
segment also includes the Hosiery segment, which makes women's
sheer hosiery in the United States.
Outerwear segment: The segment consists of casual wear and
active wear products. The casual product category provides
comfortable clothing for men, women and children under the Hanes
and Just My Size brands. The active wear products include T-shirts
and fleece sold to both retailers and wholesalers. The company
sells this segment's products to both retailers and
International segment: The International segment includes sales
from Latin America, Asia, Canada, Australia, Japan, Mexico and
Brazil. The company also has sales offices in India and China. The
segment produces and sells products under brands such as Hanes,
Champion, Wonderbra, Playtex, Stedman, Zorba, Rinbros, Kendall,
Soly Oro, Ritmo and Track N Field.
Direct to Consumer segment: This segment includes sales from
value-based store outlets and Internet operations that sell
products to its customers directly.
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