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Hanesbrands Benefits from Innovate-to-Elevate - Analyst Blog

On May 30, 2014, we issued an updated research report on Hanesbrands Inc. ( HBI ). This apparel retailer reported first-quarter fiscal 2014 results on Apr 24, 2014.

Hanesbrands' first-quarter fiscal 2014 earnings per share of 76 cents shot up 49.0% from prior-year quarter. Earnings also beat the Zacks Consensus Estimate of 58 cents by 31.0%. Profit was driven by higher margins backed by the success of the Innovate-to-Elevate strategy.

Increased supply chain operating efficiencies, lower selling, general and administrative costs, and successful integration of the recently acquired Maidenform Brands also backed the profit swing. Although sales of $1.06 billion slightly missed the Zacks Consensus Estimate, it surpassed year-ago results by 12%.

Hanesbrands expects the business momentum to continue and upped its guidance for fiscal 2014. The company now expects earnings per share in the range of $4.80 to $5.00 instead of $4.60 to $4.80. The company also expects operating profits in the range of $665 to $685 million, up from $640 to $660 million.

Overall, we are encouraged with Hanesbrands' 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. We commend the company's strong brand portfolio and continuous innovations. Moreover, the company is gaining shelf space at major retail stores through strategic deals with retail giants.

The Zacks Rank #2 (Buy) company plans to stick to the Innovate-to-Elevate strategy that has increased unit selling prices while lowering unit costs. The strategy has thus helped the company to increase its adjusted operating profit margin by 400 basis points over the past five years.

Further, Hanesbrands' focus on innovation, higher-priced and higher-margin products, lower cotton costs and prudent expense management bode well for further profit.

Key Picks from the Sector

Other stocks worth considering in the textile-apparel sector include Columbia Sportswear Co. ( COLM ), V.F. Corp. ( VFC ) and Michael Kors Holdings Ltd. ( KORS ). All these companies carry a Zacks Rank #2.

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HANESBRANDS INC (HBI): Free Stock Analysis Report

MICHAEL KORS (KORS): Free Stock Analysis Report

V F CORP (VFC): Free Stock Analysis Report

COLUMBIA SPORTS (COLM): Free Stock Analysis Report

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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.


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

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