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International and Online Channel Sales Drive Hanesbrands' Q4 Results


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Hanesbrands ( HBI ), a leading global marketer in everyday basic apparel, posted a second consecutive quarter of organic growth in its recent earnings announcement. Net sales of the company rose 4.4% to $1.6 billion, while sales for full year 2017 rose 7.4% to $6.5 billion driven by growth across all its segments, international diversification, and rising online sales.

The company also announced the acquisition of the Bras N Things , a specialty retailer and online seller of intimate apparel in Australia, New Zealand, and South Africa. This acquisition will support Hanesbrands' Bonds underwear business in Australia and New Zealand. At a purchase price of 10-times  2017 EBITDA, the company expects to generate significant cost and revenue synergies from this acquisition in 2018.

Looking ahead, the company forecasts 2018 sales to marginally grow to 6.72-6.82 billion and 2018 adjusted earnings of $1.72-1.80 per share. Please refer to our dashboard analysis on HBI's Q4 .

Key trends from Hanesbrands' fourth quarter earnings are outlined below:

Growth in International  Sales  - Increasing geographical diversification benefited Hanesbrands sales by generating organic growth. Global activewear organic sales increased 7% and global Champion sales rose 15% y-o-y in Q4. Global innerwear organic sales increased at a more modest rate of 2%. Robust consumer demand and new store openings across Asia, Europe, and Australia enabled this organic growth.

Double-Digit Online Sales Growth - Driven by the growing trend of online shopping , Hanesbrands online sales rose by 22% y-o-y in the fourth quarter. More importantly, online sales of the company rose in every geography underlining this to be a global trend. The online channel comprises of the company and retailer websites. This channel now constitutes about 11% of the company's total sales in the fourth quarter. Looking ahead, with rising disposable incomes and people continuing to spend more online, this channel will likely constitute an increasing share of the company's top line.

Segment-Wise Performance - The company posted broad-based growth across its key segments including Innerwear, Activewear, Direct to consumer, and International.

 Major Boost from Acquisition of  'Bras N Things' and Alternative apparel - After the acquisition of Alternative apparel in October 2017, HBI has also entered into a definitive agreement to acquire Bras N Things, a leading specialty retailer and online seller of intimate apparel. This recently announced acquisition has enlarged Hanesbrands' portfolio, supporting its activewear growth strategy. In particular this acquisition will likely expand the company's existing market and channel penetration in specific geographies of Australia, New Zealand, and South Africa.

Going ahead, we believe that driven by the above trends HBI will likely continue to post healthy growth in its results in 2018.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks , US Markets , Investing Ideas
Referenced Symbols: HBI


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