) reported fourth-quarter 2013 earnings per share of 98 cents,
down 9.2% from the comparable prior-year quarter. Earnings lagged
year-ago results due to planned increases in advertising and
However, earnings beat the Zacks Consensus Estimate of 90
cents by 8.9%. Although earnings were lower than year-ago
results, they were higher than management's guidance of a range
of 82 cents to 92 cents due to higher-than-expected revenues in
most of the segments.
Moreover, higher margins backed by the success of the
'Innovate-to-Elevate' strategy backed the earnings upswing. The
strategy focuses on value-added, higher-priced and higher-margin
items that can be supplied at lower cost.
Revenues and Operating Profits
Quarterly revenues gained 12.0% and came in at $1.29 billion
backed by 9 percentage point (pp) contribution by the Maidenform
brand and 3 pp contribution by the rest of the segments. Sales
were slightly ahead of the Zacks Consensus Estimate of $1.25
billion due to higher-than-expected revenues in all the business
Gross profit went up 11.4% year over year to $443.5 million,
while gross profit margin remained flat year over year at 34.5%
in the fourth quarter as lower cost of sales was offset by
Operating profit in the quarter inched down 0.3% to $152.5
million from $153.0 million in the year-ago quarter. Operating
profit margin shrank 140 basis points (bps) to 11.9% as charges
from the Maidenform acquisition weighed down margins by 90
Net revenue for the Innerwear segment climbed 19.6% year over
year to $700.5 million in the reported quarter driven by
double-digit growth in socks and panties, and single-digit growth
in men's underwear and bras segment.
Operating profit in the segment declined 3.5% year on year to
$125.1 million, due to higher investment in advertisement to
support campaigns for Hanes underwear and panties.
: Activewear segment sales went up 1.0% from the year-ago period
to $340.4 million, backed by mid single-digit gains in the
Champions brand. Higher sales in the Gear for Sports brand also
contributed to sales growth in the segment.
The segment's operating profit was up 9.0% to $43.7 million,
compared to $40.1 million a year ago driven, by lower selling,
general and administrative expenses.
: Net sales in the International segment inched up 0.7% to $137.5
million in the quarter. Foreign exchange headwinds primarily hurt
the segment results. Excluding currency, revenues in this segment
increased 4% in the quarter. Operating profit slipped 8.2% to
$11.2 million due to unfavorable currency translation.
Direct to Consumer
: Direct to Consumer segment's sales went up 14.3% to $107.4
million backed by contributions from the Maidenform acquisition.
However, operating profit surged 30.8% to $9.3 million compared
with the year-ago level backed by higher sales from in the
For fiscal 2013, earnings per share went up 49% year over year
to $3.91 backed by higher profitability as a result of lower
cotton costs and benefits of the company's Innovate-to-Elevate
initiative. Earnings were ahead of the Zacks Consensus Estimate
of $3.82 by 2.4%.
Quarterly revenues increased 2% to $4.63 billion, while on a
constant currency basis, net sales increased 3%. Sales were
slightly ahead of the Zacks Consensus Estimate of $4.61 billion
due to higher-than-expected sales in most of the business
Other Financial Updates
The company exited the fourth quarter of 2013 with cash and
cash equivalents of $115.9 million compared with $132.3 million
in the previous quarter. Long-term debt was $1.5 billion in the
fourth quarter of 2013 compared with $1.25 billion in the
On Jan 28, 2014, Hanesbrands hiked the quarterly dividend by
50% to 30 cents per share payable on Mar 11, 2014, to
shareholders of record at the close Feb 18, 2014
For full-year 2014, the company expects business momentum to
continue backed by the Innovate-to-Elevate strategy. Hanesbrands
now expects earnings per share in the range of $4.60 to $4.80,
higher from previously announced range of $4.25 to $4.50. It
expects operating profits between $640 million and $660 million
for the year and net sales slightly less than $5.1 billion in
Hanesbrands engages in the marketing of innerwear, outerwear
and hosiery apparel and carries a Zacks Rank #4 (Sell). Some
better-ranked stocks in the same industry are
Columbia Sports Inc.
Michael Kors Holding Limited
Abercrombie & Fitch Co. (
All these stocks carry a Zacks Rank #2 (Buy).
ABERCROMBIE (ANF): Free Stock Analysis Report
COLUMBIA SPORTS (COLM): Free Stock Analysis
HANESBRANDS INC (HBI): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
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