On Dec 13, we reiterated our Outperform recommendation on
), following an optimistic guidance for the upcoming quarter.
Why Maintained at Outperform
Hanesbrands has been reporting decent results for the past few
quarters backed by its strategic initiative -
Innovate-to-Elevate. On Oct 31, 2013, Hanesbrands upped its
earnings and sales guidance for the upcoming fourth-quarter
fiscal 2013. In spite of delivering mixed results in the third
quarter, Hanesbrands upped its guidance as it sees opportunity to
expand its margins in the coming quarter backed by lower cotton
costs and the Innovate-to-Elevate strategy, which focuses on
It raised its earnings per share guidance to a range of $3.75
to $3.85 from $3.50 to $3.65. Management expects the Maidenform
acquisition to contribute 10 cents to the earnings upside during
the quarter. It expects operating profits between $580 million
and $590 million for the year, higher than the previous estimated
range of $550 million to $575 million. It expects net sales
slightly above $4.6 billion compared with $4.55 billion in the
Moreover, Hanesbrands raised the 2014 earnings per share
target range to $4.25 to $4.50 from the low $4.00 range.
Hanesbrands' third-quarter 2013 earnings of $1.23 beat the
prior-year quarter earnings and the Zacks Consensus Estimate by
10.8% and 7.8%, respectively. Although sales lagged the Zacks
Consensus Estimate and year-ago results, operating profit climbed
in double digits on the back of decreased cotton costs, favorable
pricing and successful implementation of the Innovate-to-Elevate
We are also encouraged by the strategic acquisition of
Maidenform Inc. completed in October. Maidenform sells intimate
apparel products as a core category of Hanesbrands, which is
particularly encouraging. The acquisition will bring Maidenform's
popular brands like Flexees, Lilyette, Self Expressions and Sweet
Nothings into Hanesbrands' already rich portfolio.
Moreover, with the acquisition, Hanesbrands will be able to
expand its customer base to include the younger generation as
average-figure bra business of Maidenform targeting younger
buyers complements Hanesbrands' full-figure bra business
targeting older women.
Hanesbrands engages in the marketing of innerwear, outerwear
and hosiery apparel and carries a Zacks Rank #1 (Strong Buy).
Other companies in the same industry are
G-III Apparel Group, Ltd.
Michael Kors Holding Limited
). While G-III Apparel carries a Zacks Rank #1, Micheal Kors and
Marinemax hold a Zacks Rank #2 (Buy).
G-III APPAREL (GIII): Free Stock Analysis
HANESBRANDS INC (HBI): Free Stock Analysis
MARINEMAX INC (HZO): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
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