We return to a Neutral recommendation from Outperform on
Hanesbrands Inc. following its slightly soft third-quarter fiscal
2014 results. Although earnings per share of $1.73 improved 44%
from the year-ago results and beat the Zacks Consensus Estimate by
a penny driven by higher nmargins, sales missed the consensus mark
by 1%. Sales increased 17% from the year-ago results, but currency
continued to affect the top line. Overall, we remain encouraged
with the company's favorable pricing and successful implementation
of the margin boosting Innovate to Elevate strategy. Hanesbrands
continues its strategic acquisitions and the recent DBApparel
takeover prompted it to raise the fiscal 2014 outlook. However, we
remain cautious about the slowdown in the business momentum of the
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 segment: 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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