HanesBrands Q3 sales up 6 percent, maintains outlook

HanesBrands Inc. net sales for the third quarter totaled 1.79 billion dollars, an increase of 98 million dollars or 6 percent, including 33 percent growth in Champion brand sales globally.

This compared with 1.69 billion dollars for the quarter ended September 26, 2020, which included 179 million dollars in sales of personal protective equipment in response to the Covid-19 pandemic. Excluding PPE, net sales increased 276 million dollars or 18 percent, over prior year.

The company said in a statement that this year-over-year growth was driven by strong consumer demand and point-of-sale trends in the U.S., Europe, Americas and certain Asia markets, including China, which more than offset headwinds from the extended government Covid-related lockdowns in Australia and Japan. Total constant currency third-quarter net sales increased 5 percent.

“We are maintaining our fourth-quarter outlook for net sales and adjusted operating profit, driven by continued demand for our brands, our strong inventory position and our global team’s proven ability to manage ongoing macro challenges,” said HanesBrands chief executive officer Steve Bratspies.

Highlights of HanesBrands’ third quarter performance

Compared to third-quarter 2019, HanesBrands net sales increased 179 million dollars or 11 percent, including 20 percent growth in Champion brand sales globally. Total constant currency net sales increased 10 percent. The company added that growth in the global innerwear and activewear businesses was driven by strong consumer demand, higher point-of-sale performance and market share gains.

For the third-quarter 2021, GAAP gross margin of 39.1 percent increased 530 basis points compared to prior year and 170 basis points compared to third-quarter 2019. Adjusted gross margin of 39.1 percent increased 250 basis points over last year and approximately 65 basis points over 2019.

Third-quarter GAAP operating profit increased 24 percent to 235 million dollars compared to prior year and decreased 10 percent compared to third-quarter 2019. GAAP operating margin of 13.1 percent increased 190 basis points compared to prior year and decreased 200 basis points compared to third quarter 2019.

Adjusted operating profit of 264 million dollars increased 22 million dollars or 9 percent compared to prior year and 20 million dollars or 8 percent compared to 2019. Adjusted operating margin of 14.7 percent increased approximately 50 basis points compared to last year

HanesBrands business segment results in Q3

Innerwear sales decreased 90 million dollars or 11 percent due to the overlap of last year’s 166 million dollars of PPE sales. Men’s, kids and socks revenue increased mid-to-high single digits while women’s revenue increased approximately 20 percent. Excluding PPE, innerwear sales increased 12 percent over last year with strong point-of-sale growth across channels. Sales increased 140 million dollars or 25 percent compared to third-quarter 2019, with double-digit growth in the kids, socks, women’s and men’s businesses.

Activewear sales grew 138 million dollars or 42 percent over prior year driven by strong double-digit growth in both the Champion and Hanes brands. Activewear revenue increased 17 million dollars or 4 percent against the third quarter of 2019. Champion brand sales within the segment increased 14 percent, which more than offset declines in other brands.

International segment revenue increased 30 million dollars or 6 percent compared to prior year. Excluding 13 million dollars of PPE sales in the prior year quarter, third-quarter sales increased 9 percent on a reported basis and 7 percent on a constant currency basis. International segment revenue increased 23 million dollars or more than 4 percent compared to third- quarter 2019. On a constant currency basis, sales increased more than 1 percent.

HanesBrands reveals Q4 and full year outlook

For fourth-quarter 2021, the company currently expects net sales from continuing operations of approximately 1.71 billion dollars to 1.78 billion dollars, which represents approximately 3 percent growth over prior year at the midpoint and includes a projected benefit of approximately 6 million dollars from changes in foreign currency exchange rates.

Adjusting for PPE and the 53rd week in 2020, net sales at the midpoint of the guidance range are expected to increase 8 percent over the prior year period. As compared to rebased fourth-quarter 2019, net sales at the midpoint are expected to increase 15 percent.

GAAP operating profit from continuing operations is expected to range from approximately 182 million dollars to 202 million dollars. Adjusted operating profit from continuing operations to range from approximately 200 million dollars to 220 million dollars. The midpoint of adjusted operating profit represents an operating margin of approximately 12 percent. GAAP earnings per share from continuing operations are expected to range from approximately 24 cents to 29 cents and adjusted earnings per share to range from approximately 40 cents to 45 cents.

For fiscal-year 2021, the company currently expects net sales from continuing operations to total approximately 6.76 billion dollars to 6.83 billion dollars, which represents approximately 11 percent growth over prior year at the midpoint and includes a projected benefit of approximately 108 million dollars from changes in foreign currency exchange rates. Adjusting for PPE and the 53rd week in 2020, net sales at the midpoint of the guidance range are expected to increase 29 percent over the prior year period. As compared to rebased 2019, net sales at the midpoint are expected to increase 13 percent.

GAAP operating profit from continuing operations is expected to range from approximately 825 million dollars to 845 million dollars, adjusted operating profit from continuing operations to range from approximately 910 million dollars to 930 million dollars. The midpoint of adjusted operating profit represents approximately 18 percent growth compared to prior year and 12 percent growth compared to 2019. The midpoint of adjusted operating profit guidance range represents an operating margin of 13.5 percent.

GAAP earnings per share from continuing operations are expected to range from approximately 1.53 dollars to 1.58 dollars and adjusted earnings per share to range from approximately 1.79 dollars to 1.84 dollars.